Working Paper: NBER ID: w23630
Authors: Lorenzo Caliendo; Ferdinando Monte; Esteban Rossi-Hansberg
Abstract: We study the effect of exporting on the organization of production within firms. Using French employer-employee matched data together with data on a firm’s exporting activity, we find that firms that enter the export market and expand substantially reorganize by adding layers of management, hiring more and paying, on average, lower wages to workers in all pre-existing layers. In contrast, firms that enter the export market and expand little do not reorganize and pay higher average wages in all pre-existing layers. We then present some evidence that these effects are causal using pre-sample variation in the destination composition of exports, in conjunction with real exchange rate variation across countries. Our results are consistent with a growing literature using occupations to study the internal structure of firms and how their organization responds to opportunities in export markets.
Keywords: Exporting; Organizational Change; Production; Wages; Management Layers
JEL Codes: D22; F1; F16; J24; J31; L23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Exporting (F10) | Probability of adding layers (C69) |
| Exporting (F10) | Reorganization by adding layers of management (L22) |
| Exporting (F10) | Hiring more employees (J23) |
| Exporting (F10) | Reduction in average wages across all preexisting layers (J31) |
| Exporting (for firms that expand little) (F10) | Higher average wages in existing layers (J31) |
| Exporting (for firms with one to three layers) (F10) | Significant increase in probability of adding layers (C69) |
| Exporting (for firms with four layers) (L10) | No significant increase in probability of adding layers (C69) |