Firm-Level Prices, Quality, and Markups: The Role of Immigrant Workers (Second round of R&R requested from the Review of International Economics)

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 firms. 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 

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

Centre for Trade and Economic Integration Working Paper Series and CentER Discussion Paper; Vol. 2022-012 

Abstract: We use French employer-employee data to reassess the wage gap between native and foreign workers. We find that the wage gap varies with the export intensity of the firm and the occupation of the worker. A model with heterogeneous firms and workers shows that our findings are consistent with white-collar immigrants capturing an informational rent. The evidence supports this mechanism. First, we show that the wage gap is positively correlated with the complexity of the firm export activity. Second, we show that wages react to changes in export intensity when the export destination coincides with the origin of foreign workers.

Academic Publications

Immigrant Workers and Firm Resilience on the Export Market (joint with Léa Marchal)

Review of World Economics (2022). Open access available here.

This paper studies whether firms employing immigrant workers are more resilient to an increase in competition in their export markets. 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 competition in a foreign market has a negative effect on both the two-year survival and growth rate of sales of French exporters on that foreign market. This negative effect on firm performance is mitigated by the employment of immigrant workers. 

Distance(s) and the volatility of international trade(s) (joint with Arnaud Mehl, Martin Schmitz, and Cédric Tille)

European Economic Review (2024). Open access available here.

Abstract: We show that distance matters for the volatility of international trade and financial transactions on top of its well-known impact for their levels. We conduct event studies on the global financial crisis and the Covid-19 pandemic with country-level and product-level data, and a longer panel data analysis. We consider measures of physical, virtual, and language distance jointly – the latter two proxying for ease of communication. We find evidence of larger trade declines in more distant country dyads and underscore the relevance of information frictions rather than shipment costs. Physical distance matters for trade volatility beyond goods, as do virtual and language distances. Physical and virtual distances amplify each other's effects at the country level, as do virtual and language distances at the product level. Distance effects are also weaker for homogenous products and foreign direct investment and banking activity entailing local presence, again pointing to the importance of information frictions. 

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