Staff Seminar

The Global Division of Labour - Léa Marchal & Julian Hinz

06 Feb 2018

From the IFW event series: Staff Seminar

14:00

15:00

Institut für Weltwirtschaft

Speaker

Léa Marchal (Kiel Institute, RA "The Global Division of Labour")

Abstract

The literature focusing on the impact of immigrants on exports acknowledges the presence of a reverse causality bias. However, virtually no study investigates this bias. We fill this gap by analysing how exports of French firms determine their employment of foreign-born workers. To allow for causal inference, we use an export demand proxy that reacts to macro-economic fluctuations in the firm’s export destinations but is exogenous to its employment decisions. Using firm-level data on the French manufacturing sector from 2005 to 2009, we find that exporters facing an increase in demand hire more skilled foreign workers. This effect is robust to the inclusion of labour flexibility proxies which suggests that firms do hire foreign-born workers for their knowledge of export markets.

Authors

Léa Marchal (Kiel Institute) — Lenka Wildnerova (École Normale Supérieure de Cachan & CES-CNRS )

Speaker

Julian Hinz (Kiel Institute, RA "The Global Division of Labour")

Abstract

Economic transactions necessitate that buyer and seller communicate. While common spoken languages have been widely recognized as a determinant of trade, the mechanisms at play are largely lacking micro-foundations. In this paper we explicitly incorporate languages in a model of trade between locations with heterogeneous consumers and heterogeneous firms. The model yields a structural gravity equation that can be used to compute general equilibrium counterfactuals with different underlying local language distributions. We quantify the model by deriving the local distribution of languages from a sample of 2 billion geolocalized tweets and conduct several counterfactual experiments. For one such experiment, a common European language, we find welfare gains of on average 9 % across locations in Europe, with significant heterogeneity in magnitude between locations. For another experiment, the elimination of within-country language diversity in Europe, the model predicts significant welfare losses of on average -3 % across locations in Europe. The results underline a significant “economic value” associated with common.

Authors

Julian Hinz (Kiel Institut) — Elsa Leromain (London School of Economics & Paris School of Economics)

The Global Division of Labour - Léa Marchal & Julian Hinz

Foreign Workers and Exports: Exploring a Reverse Causality Bias

Speaker

Abstract

Authors

Now We’re Talking: Quantifying the Effect of Languages on Trade with 2 billion Tweets

Speaker

Abstract

Authors

Léa Marchal, Ph.D.

Dr. Julian Hinz

Institution

Global Division of Labor

Kiel Institute for
the World Economy

Léa Marchal, Ph.D.

Dr. Julian Hinz

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