Firm-Level Prices, Quality, and Markups: The Role of Immigrant Workers

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.

Keywords: Traders, Immigrant workers, Quality, Markups, Prices