New Imported Inputs, Wages and Worker Mobility

63 Pages Posted: 10 Nov 2019

See all articles by Italo Colantone

Italo Colantone

Bocconi University

Alessia Matano

University of Barcelona - Regional Quantitative Analysis Group (AQR-IREA)

Paolo Naticchioni

University of Roma

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Abstract

We study how firms and industries adjust to increasing international trade in intermediate inputs. In particular, we provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on assortative matching between firms and workers. We employ matched employer-employee data for Italy, over 1995-2007. We complement these data with information on the arrival of new import-ed inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/blue-collar ratio; and (2) an increase in the average wage growth of blue-collar workers, while the wage growth of white collars is not significantly affected. The individual-level analysis reveals that the increase in the average wage of blue collars is driven by the displacement of the lowest paid workers, while continuously employed individuals are not affected. We estimate the unobserved skills of workers following Abowd et al. (1999). We find evidence that new imported inputs lead to a positive selection of higher-skilled workers, and to an increase in the degree of positive assortative matching between firms and workers.

Keywords: matched employer-employee data, wages, new imported inputs

JEL Classification: J01, J31, F14

Suggested Citation

Colantone, Italo and Matano, Alessia and Naticchioni, Paolo, New Imported Inputs, Wages and Worker Mobility. IZA Discussion Paper No. 12715, Available at SSRN: https://ssrn.com/abstract=3483953

Italo Colantone (Contact Author)

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Alessia Matano

University of Barcelona - Regional Quantitative Analysis Group (AQR-IREA) ( email )

Tower IV
Av. Diagonal 690
Barcelona, 08034
Spain

Paolo Naticchioni

University of Roma ( email )

Roma
Italy

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