This Wednesday Jennifer Poole (UC Santa Cruz) is presenting her work, "Trade Liberalization, Firm Heterogeneity, and Wages: New Evidence from Matched Employer–Employee Data."
The seminar is 12PM-1:15PM in Kreeger 101.
In this paper, we use a linked employer–employee database from Brazil to examine the heterogeneous responses of exporters and non-exporters to trade reform. We begin our analysis at the firm level and estimate how average wages respond to trade liberalization and test whether these responses vary by the firm’s export status. We find that wages at exporting firms increase relative to non-‐exporters in response to a decline in protection and that the differential impact is mainly due to exporters in sectors in which Brazil has the comparative advantage. We then decompose firm-level average wages into a component reflecting the firm’s workforce composition and a component reflecting the firm’s performance. Our decomposition suggests the relative increase in wages is largely due to the portion of wages that can be attributed to the relative performance improvement at exporters post-‐liberalization; differential changes in unobservable workforce composition play a minor role in explaining the differential response to liberalization by firms with differing trade orientation. Our worker-level analysis, where we test for the differential impacts of trade liberalization on otherwise identical workers employed in heterogeneous firms, is supportive of this finding.