Does Exporting Improve Matching? Evidence from French Employer-Employee Data

89 Pages Posted: 22 Dec 2015

See all articles by Matilde Bombardini

Matilde Bombardini

University of British Columbia (UBC)

Gianluca Orefice

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Maria Tito

Board of Governors of the Federal Reserve System

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Date Written: 2015-12-18

Abstract

Does opening a market to international trade affect the pattern of matching between firms and workers? This paper answers this question both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms in which variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market, their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence, exporting firms select sets of workers that are less dispersed relative to the average. We then document a novel fact about the hiring decisions of exporting firms versus non-exporting firms in a French matched employer-employee dataset. We construct the type of each worker using both a traditional wage regression and a model-based approach and construct measures of the average worker type and worker type dispersion at the firm level. We find that exporting firms feature a lower type dispersion in the pool of workers they hire. This effect is comparable and larger than the common finding in the literature that exporters pay higher wages because, among other factors, they employ better workers. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariff shocks. Finally, we show that revenue loss is lower relative to the optimum allocation for exporting and more productive firms. This analysis is suggestive of the potenti al presence of additional gains from trade due to improved sorting.

Keywords: International Trade, Search frictions, Worker-Firm Matching

Suggested Citation

Bombardini, Matilde and Orefice, Gianluca and Tito, Maria, Does Exporting Improve Matching? Evidence from French Employer-Employee Data (2015-12-18). FEDS Working Paper No. 2015-113, Available at SSRN: https://ssrn.com/abstract=2705732 or http://dx.doi.org/10.17016/FEDS.2015.113

Matilde Bombardini (Contact Author)

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

Gianluca Orefice

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

Maria Tito

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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