Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/295918 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 16895
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper identifies the causal effects of trade shocks on worker outcomes. We exploit a unique setting based on three pillars: (i) a large, unanticipated appreciation of the Swiss franc in 2015, (ii) detailed data with firm-level exposure to trade via output markets (both domestic and foreign) and imported inputs (distinguished by their foreign labor content), which we match to (iii) worker-level panel data with rich information on labor-market outcomes. We find that increased competition in output markets induces negative effects on earnings for workers of affected firms. Conversely, a price drop of foreign inputs generates positive effects for workers of importing firms, but less so the higher the labor content of these imported inputs. All these patterns are consistent with a parsimonious model of task-based production. Moreover, positive and negative earnings effects are especially strong for workers in the lower tail of the within-firm wage distribution and, in particular, for workers who change their employer, pointing at involuntary (voluntary) job separations from firms that are negatively (positively) affected by the exchange rate appreciation.
Subjects: 
trade and labor
exchange rate shock
matched employer-employee data
JEL: 
F14
F16
J46
Document Type: 
Working Paper

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