Firm-Level Prices, Quality, and Markups: The Role of Immigrant Workers (Job Market Paper)

Latest Version (here)

Abstract: In this paper, I study export quality as a channel through which immigrant workers affect the export prices and markups of French manufacturing traders. I find that the share of immigrant workers in a local labor market is positively associated with firm-level export prices and quality and that this quality advantage translates to higher markups. I present evidence for the mechanism accounting for these relationships and find that the presence of immigrant workers is positively associated with firms importing higher-price (higher-quality) intermediate inputs, which are key to producing higher-price (higher-quality) exports. The hypothesized economic mechanism is that immigrant workers help firms overcome informational barriers to sourcing higher-price (higher-quality) inputs from abroad. I provide evidence consistent with immigrant workers having specialized knowledge of the upstream market.

Working Papers

Immigrant Employment, Firm Export Performance and Import Competition (joint with Léa Marchal)

ANR-DFG project: NaWaCC

Mimeo(Latest Version) and Centre d'Economie de la Sorbonne Working Papers

R&R Review of World Economics

Abstract: This paper investigates whether the employment of immigrant workers affects the performance of firms in their export markets when they are facing an increase in import competition. Exploiting the surge of Chinese imports following its accession to the World Trade Organization and using a sample of French manufacturing exporters from 2002 to 2015, we find that an increase in the growth rate of Chinese imports in a market has a negative effect on both the survival probability of firms and the growth rate of sales on that market. This negative effect on firm performance is mitigated by the employment of immigrant workers.

When Immigrants Meet Exporters: A Reassessment of the Immigrant-Native Wage Gap (joint with Léa Marchal and Guzman Ourens)

Centre for Trade and Economic Integration Working Paper Series

Abstract: We use French employer-employee data for the manufacturing sector from 2005 to 2012 to reassess the wage gap between native and foreign workers. In line with previous evidence, we find that immigrants earn less than natives and that exporters pay higher wages. In a new contribution to this literature, we find that the nativity wage gap varies with the export intensity of the firm and the occupational group of the worker within the firm. We present a model with heterogeneous firms and workers to show that our findings are consistent with white-collar immigrant workers capturing an informational rent, as they provide exporters with valuable information for accessing foreign markets. We provide empirical evidence for this mechanism by analysing how the nativity wage gap varies with the complexity of firm export activity, and with the group of origin of the immigrant workers.

Policy Publications

The impact of digital technologies on developing countries’ trade (joint with Eddy Bekkers, Robert Koopman, Robert Teh)

Abstract: Using the World Trade Organization (WTO) Global Trade Model (GTM), a recursive, dynamic computable general equilibrium model, we examine the potential future impact of technological innovations, in the form of robotization and use of artificial intelligence (AI), servicification of the production process, and falling trade costs due to the rise of online markets and platforms on the trade of developing countries. The simulations show that technological change will boost trade growth, as a result of both falling trade costs and the more intensive use of information and communications technology (ICT) services. On average, between now and 2030 global trade growth would be 2 percentage points per annum higher as a result of digital technologies. Further, developing countries’ trade growth would be 2.5 percentage points per annum higher and the increase in their share of global trade will be more pronounced the faster they are able to catch up technologically. Another finding from the simulations is that services exports will become a bigger part of global trade, making up more than a quarter of total trade by 2030, and technological changes tend to increase the share of services imports in manufacturing gross output. Finally, these technological developments do not appear to portend a reshoring or localization of production, suggesting that future technological change can go in hand in hand with continuing globalization.

Chapter available here