1. Employment, skill structure and international trade: firm- level evidence for France Pierre Biscourp – Francis Kramarz (2007)

2. 1. Introduction

3. Literature Krugman : the decrease of unskilled labor in every industry is due to a skilled biaised technical change Bernard and Jensen,1997 : changes in product demand were the key element to understand the decrease of demand for unskilled labor.

4. Empirical analysis 3 steps: relation between trade and the creation/destruction of manufacturing jobs relation between trade and skill structure examine the robustness of our results to the introduction of firm-level measures of innovation in order to control for changes in technology.

5. Economic motivation Motivations for firms to turn to international markets If labor costs are less abroad, imports offer a cost reduction. Increasing imports may require a reorganisation of the firm and rise demand for engineering and managerial labor. Concerning exports: “good firms become exporters” and employment growth seems to be associated with export growth.

6. 3. DATA

7. Data Construction Declarations to French customs constitute the basis of all French trade statistics Customs data set (Ex, Im firms by SIREN nb (total transactions 1986-92 for FG/II - for 3 origins for Im and 1 for Ex in FF)) Focus on firms in manufacturing BAL-SUSE database (firm-level information) "dying firms"; "new firms"; "continuing firms" But to measure skills ESE 2 measures of the firm`s skill structure: -proportion of production workers in total employment -ratio of unskilled production workers to total production workers Finally, we merge with Innovation Survey 1991

8. Internationally active firms

9. Evidence A small portion of firms are active in foreign markets But those most active represent the bulk of French sales Distance matters More firms import II than FG

10. Most firms import or export very little

11. 4. Employment and trade

12. The rate of growth Employment of i at the beginning and at the end: The average employment over the period: Employment growth in i over the period: Averaged across the economy: Across various categories of internationalization: Decomposition of total employment growth:

13. Employment growth and import status

14. How does this increase in imports correlate with declines in employment across firms? Dying and new-born firms that import contributed more to employment turnover than those that did not Job losses at dying firms that imported were proportionately greater than job creation at new firms that also imported Among continuing firms, increased imports are associated with decreased employment

15. Employment growth and export status

16. Main results Some of the results for imports also hold for exports. But, expanding imports appear to be associated with more employment losses than expanding exports: More employment is created in new firms that import than in new firms that export But, more employment is destroyed in dying firms that imported than in dying firms that exported

17. Employment growth and ex and im status (by size of the firm) Bigger firms tend to destroy more employment irrespective of trade status Large importing firms also destroy more Large firms destroy, small create (case of continuously importing firms with increased ratio and those who started to import) The same situation with exporting firms

18. Employment growth and imports of FG

19. Employment growth and of FG from low-wage countries

20. Result The first group, a subset of the second, has much lower growth The subset of firms that import FG from low-wage countries (this is also true for firms that import II from low-wage countries) have even lower growth rates than firms which import FG or II Firms importing FG, and even more so firms importing FG from low-wage countries, destroy employment—more employment than non-importing firms; even though this destruction does not appear to be directly associated with large increases in such imports The same case for imports of II

21. Regression analysis to the set of continuing firms

22. 5. Skills and Trade Role of skills in the relation between trade and employment

23. 2 variables Blue-collar workers Among them: unskilled blue- collar workers

24. 2 components of changes Between-industry changes Within-industry changes Data from NAP600

25. The equation of production employment From Davis and Haltwanger (1999): Q = blue-collar employment L = total employment s = industry E and B = end and beginning of sample period S = share of total employment of s First part = contribution of between-industry reallocation to changes in employment Second part = contribution of within-industry reallocation to changes in employment

26. The overall regression

27. Results Decline of share of blue-collar workers (skilled and unskilled) in within-industry The negative impact of FG increase on production of jobs

28. The within-industry regression Firms that are continuously present in the foreign markets  jobs destruction Among firms that import: which one destroy more jobs ? Among firms that export: which one destroy more jobs ?

29. Regression which disentangle FG and II imports Effect of imports FG and II on jobs ? Which is the most robust ? What about geography ?

30. The introduction of innovation

31. Results Control the effect of innovation  bias technical change Positive effect of product and commercial innovation on employment growth Negative effect of process innovation and product improvement on employment growth Difference of impact according to the type of R&D strategy Relation trade/technical innovation and employment is a complementary relation

32. 6. Conclusion and Outlook What can we retain ? What can we expect ?

33. A. Conclusion The specificity of this study Importation of FG destroy more jobs than importation of II Export impact positively employment growth Imports from low-wage countries affect slightly more labor framework With traderization, demand for unskilled labor decrease in every industry Exporting plant played a key role in production jobs The main limit: no « minus » in tables Other limit: same results for other DC ? Only focus in imports And this study is only descriptive

34. B. Outlook 2 ways to identify causal effect: o Introduction of valid instruments for bilateral trade o Estimation of structural models (cf: Melitz 2003) Should we maintain the level of high minimum wage in France ? Is this paper might contradict some alter-globalization ideas ? ….

35. Thanks you ! Now, Question ?