Firm export diversification and change in workforce composition

Sarah Guillou, Tania Treibich*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

The objective of this paper is to show that part of the fixed cost of a firm’s trade expansion is due to the acquisition of new internal capabilities (e.g., technology, production processes or skills), which implies a costly change in the firm’s internal labor organization. We investigate the relationship between a firm’s labor structure, in terms of the relative number of managers, and the scope of its export portfolio, in terms of its product–destination varieties. The empirical analysis is based on a matched employer–employee dataset covering the population of french firms from tradable sectors over the period 2009–2015. Our analysis suggests that market expansion, both through export entry and export diversification, is associated with a change in the firm’s workforce composition, namely an increase in the number of managerial layers. These results are generally confirmed with the use of an instrumental variable approach to control for reverse causality. We show how these results are consistent with a simple model, where the complexity of a firm’s operations increases with the number of product–destination couples exported and the manager’s role is to address the unsolved problems arising from such increased operational complexity.
Original languageEnglish
Pages (from-to)645-676
Number of pages32
JournalReview of World Economics
Volume155
Issue number4
DOIs
Publication statusPublished - Nov 2019

JEL classifications

  • f16 - Trade and Labor Market Interactions
  • e24 - "Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital"
  • c14 - Semiparametric and Nonparametric Methods: General
  • d22 - Firm Behavior: Empirical Analysis

Keywords

  • Export diversification
  • Managers
  • Occupations
  • Employer-employee data
  • INTERNATIONAL-TRADE
  • MULTIPLE-PRODUCT
  • WAGE INEQUALITY
  • IMPACT
  • GLOBALIZATION
  • SIZE

Research Output

  • 1 Working paper

Firm Export Diversification and Change in Workforce Composition

Guillou, S. & Treibich, T., 31 Oct 2017, Maastricht University, Graduate School of Business and Economics, (GSBE Research Memoranda; No. 026).

Research output: Working paperProfessional

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