Type
Article
Title
Exports and labor costs: Evidence from a French Policy
In
Review of World Economics
Author(s)
MALGOUYRES Clément - Banque de France (Author)
MAYER Thierry - Département d'économie (Author)
Editor
DE : Springer
Volume
154
Number
3
Pages
429 - 454 p.
ISSN
16102878
DOI
10.1007/s10290-018-0320-x
Keywords
Labor costs, Firm-level exports, Competitiveness
Abstract
EN
We investigate the role that labor costs hold in exporters’ performance. To do so, we exploit a large-scale French reform that granted most firms a tax credit proportional to the wagebill of their employees paid below a given threshold. This policy effectively translated into a cut in labor cost whose magnitude varies depending on firm-specific wage structures. We use the predicted treatment intensity based on pre-reform composition of the labor force as an instrument for the actual policy-induced firm-level change in labor costs. Although our point estimates are consistent with commonly estimated firm-level trade elasticities combined with reasonable labor shares in total costs, coefficients are found to be very noisy, suggesting lack of robust evidence of a causal effect of the policy. We discuss several potential explanations for our results as well as their implications.

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