Importing, exporting, and firm-level employment volatility

Abstract

In this paper, we use detailed trade and transactions data for the U.S. manufacturing sector to empirically analyze the direction and magnitude of the association between firm-level exposure to trade and the volatility of employment growth. We find that, relative to purely domestic firms, firms that only export and firms that both export and import are less volatile, whereas firms that only import are more volatile. The positive relationship between importing and volatility is driven mainly by firms that switch in and out of importing. We also document a significant degree of heterogeneity across trading firms in terms of the duration of time and intensity with which firms trade, the number and type of products they trade and the number and characteristics of their trading partners. We find these factors to play an important role in explaining the differential impact of trading on employment volatility experienced by these firms.

Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake

“…32 Another branch of literature on the diversification of risk has studied whether firms using complex production structures with several intermediates could be less volatile (Koren and Tenreyro (2013)). Kurz and Senses (2013) establish that firms with substantial imports and exports have lower employment volatility than domestic firms in the medium to long term, which they attribute partly to the diversification of risk. 33 The key result in this paper points to a possibly overlooked fact: the extent of the benefits from diversification depends heavily on the substitutability of inputs.…”

“…See Peek and Rosengren (1997) and Peek and Rosengren (2000) for the case of U.S. affiliates from Japan. 33 An interesting result from Kurz and Senses (2013) is that firms that only import are actually more volatile than the domestic-only benchmark.…”

Offshoring and Labor Markets

“…Kurz and Senses (2016) competition and find that increased import competition has a substantial positive causal effect on labor income risk. In an extension they include a measure for industry-level offshoring and find that an increase in offshoring is associated with a decline in income risk.…”

Competitiveness, labor market institutions, and monetary policy

“…Several studies have shown that variability in exchange rates has a significant impact on the variability of US employment and wages [3], [4]. Another study also empirically documents the link between firms' openness to trade and employment volatility [5]. Employment variability is mainly driven by variability in job flows, namely job creation and destruction.…”