Working Paper: CEPR ID: DP11045
Authors: Wolfgang Dauth; Sebastian Findeisen; Jens Südekum
Abstract: This paper addresses the impact of rising international trade exposure on individual earnings profiles in heterogeneous worker-establishment matches. We exploit rich panel data on job biographies of manufacturing workers in Germany, and apply a high-dimensional fixed effects approach to analyze endogenous mobility between plants, industries, and regions in response to trade shocks. Rising import penetration reduces earnings within job spells, and it induces workers to leave the exposed industries. Intra-industry mobility to other firms or regions are far less common adjustments. This induced industry mobility mitigates the adverse impacts of import shocks in the workers' subsequent careers, but their cumulated earnings over a longer time horizon are still negatively affected. By contrast, we find much less evidence for sorting into export-oriented industries, but the earnings gains mostly arise within job spells. These results point at an asymmetry in the individual labour market response to trade shocks: Import shocks trigger substantial ``push effects'', whereas the ``pull effects'' of export shocks are weaker.
Keywords: endogenous worker mobility; individual labour market responses; international trade; work biographies
JEL Codes: F16; J31; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rising import penetration (F61) | negative effect on earnings (J31) |
| rising export opportunities (F10) | positive effect on earnings (M52) |
| import shocks (C87) | mobility out of exposed sectors (J62) |
| export shocks (F41) | mobility into less exposed sectors (J62) |
| younger and less skilled individuals (L26) | more adversely affected by import shocks (F14) |
| movers from import-competing industries (F29) | negatively selected (Y40) |