Trade and the organization of production: Efficiency and labour market outcomes

Abstract

This chapter presents novel estimates on the numbers and shares of workers in exporting and importing firms of the formal private sector in 132 countries. It shows that the share of workers employed by exporting firms dropped significantly during the trade collapse caused by the global economic crisis and has stagnated ever since. For the same set of countries, the chapter also documents that exporters and importers are more productive and pay higher wages than their non‐trading counterparts. There is, however, a gap between the productivity and the wage premium of exporting and importing firms, indicating that gains from trade are only partially translated into gains for workers. Within exporting firms, heavy exporters tend to have lower labour productivity and pay lower wages than other exporters, while firms that supply inputs into GSCs have higher productivity and pay higher wages than other exporters. Exporters, especially those that form part of GSCs by assembling final goods, employ more women than non‐exporters, but at the same time tend to have higher shares of temporary employment. Importers are found to employ fewer temporary workers.