Skip to main content

Advertisement

SpringerLink
Log in

Export activities and the demand for skills in German businesses

  • Original Paper
  • Published:
Empirica Aims and scope Submit manuscript

Abstract

This analysis deals with the influence of export activities on demand for workers of differing skill levels. Previous literature suggests that productivity of export firms can improve as a result of the lessons learned from experience in international markets and/or that such productivity may be higher from the get-go by virtue of the self-selection effect among firms involved in export activities. Engaging in export activities may potentially lead to changes in employment structure, with a greater tendency to employ more highly skilled workers. To investigate this hypothesis, we applied a conditional difference-in-difference regression model of labor demand for three different skill levels. The data we used for our work was taken from the German IAB Establishment Panel covering the period from 2000 to 2017. Our results show not only the need to control for self-selection into export activity but also that changes in employment patterns appear to be skill-biased among manufacturing firms starting out in export activities. Nevertheless, corresponding findings for firms that have ceased exporting are conspicuous by their absence. Businesses in the service sector that decide to cease exporting appear to shed workers across all skill levels.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Availability of data and material

This study uses the IAB Establishment Panel, Waves 2013–2018. Data access was provided via on-site use at the Research Data Centre (FDZ) of the German Federal Employment Agency (BA) at the Institute for Employment Research (IAB) and subsequently remote data access (Project-No. FDZ1045).

Notes

  1. Cf. the early studies by Bernard and Jensen (1995, 1999), Pavcnik (2002), Aw et al. (2000), Clerides et al. (1998), Delgado et al. (2002) and later overviews of the burgeoning literature by Bernard et al. (2007) and Wagner (2011). We will control for this selection using propensity score matching on a sample of German manufacturing and service firms (see in this context e.g., Arnold and Hussinger 2005; Wagner 2002) as described in Sect. 3 below.

  2. For a discussion on the influence of technological change on skill demand, see e.g., Acemoglu and Autor (2011), Atkinson (2008), Autor et al. (2003), Katz and Murphy (1992), and Machin and Van Reenen (1998).

  3. A shift to more skill-intensive sectors caused by compositional changes in the direction of high quality products by exporting firms will have the same effect (Melitz and Redding 2014).

  4. An alternative way to identify endogeneity in this context would be the use of instrumental variables (IV) (Dauth et al. 2014; Lichter et al. 2017). As IV requires stronger assumptions and conditions on the selection of suitable instruments when the model is estimated (Wooldridge 2010), we prefer propensity score over IV methods. Nevertheless, we also conducted regressions using the lag of the variables of interest as instrumental variables. Compared with the propensity score method, the results do not contradict the subsequent analysis and are available in the supplement (cf. S.5–S.6).

  5. In order to test whether our matching procedure matters, we estimated unweighted regressions (see supplement) and did not find significant outcomes for medium- and high-skilled workers—only the parameter estimate for low-skilled was negative and significant in the service sector. This supports the assumption of self-selectivity into international trade (cf. S.1 to S.4).

  6. The supplement also includes alternative IV estimates (cf. S.5–S.6) and specifications with continuous treatments.

  7. The regression results are available from the authors on request.

References

  • Acemoglu D (2003) Patterns of skill premia. Rev Econ Stud 70(2):199–230

    Article  Google Scholar 

  • Acemoglu D, Autor DH (2011) Skills, tasks, and technologies: Implications for employment and earnings. In: Ashenfelter O, Card D (eds) Handbook of labor economics, vol 4B. North Holland, Amsterdam, pp 1043–1171

    Google Scholar 

  • Addison JT, Bellmann L, Schank T, Teixeira P (2008) The demand for labor: an analysis using matched employer–employee data from the German LIAB. Will the high unskilled worker own-wage elasticity please stand up? J Labor Res 29(2):114–137

    Article  Google Scholar 

  • Arnold JM, Hussinger K (2005) Export behavior and firm productivity in German manufacturing: a firm-level analysis. Rev World Econ 141(2):219–243

    Article  Google Scholar 

  • Atkinson AB (2008) The changing distribution of earnings in OECD countries. Oxford University Press, Oxford

    Book  Google Scholar 

  • Autor D (2003) Outsourcing at will: The contribution of unjust dismissal doctrine to the growth of employment outsourcing. J Law Econ 21(1):1–42

    Google Scholar 

  • Autor DH, Levy F, Murnane RJ (2003) The skill content of recent technological change: an empirical exploration. Q J Econ 118(4):1279–1333

    Article  Google Scholar 

  • Aw BY, Chung S, Roberts MJ (2000) Productivity and turnover in the export market: micro-level evidence from the Republic of Korea and Taiwan (China). World Bank Econ Rev 14(1):65–90

    Article  Google Scholar 

  • Bas M, Bombarda P, Jean S, Orefice G (2017) Firms’ exports, volatility and skills: Micro-evidence from France. In: FREIT working paper, 1337

  • Bekkers E, Francois J, Machim M (2016) Trade costs, quality and the skill premium. Can J Econ 49(3):1153–1178

    Article  Google Scholar 

  • Ben Salha O (2013) Does economic globalization affect the level and volatility of labor demand by skill? New insights from the Tunisian manufacturing industries. Econ Syst 37(4):572–597

    Article  Google Scholar 

  • Berman E, Bound J, Griliches Z (1994) Changes in the demand for skilled labor within U.S. manufacturing: evidence from the annual survey of manufactures. Q J Econ 109(2):367–97

    Article  Google Scholar 

  • Bernard AB, Jensen JB (1995) Exporters, jobs, and wages in U.S. Manufacturing, 1976–1987. In: Brookings papers on economic activity, microeconomics, pp 67–119

  • Bernard AB, Jensen JB (1999) Exceptional exporter performance: cause, effect, or both? J Int Econ 47(1):1–25

    Article  Google Scholar 

  • Bernard AB, Wagner J (1997) Exports and success in German manufacturing. Weltwirtschaftliches Archiv 133(1):134–157

    Article  Google Scholar 

  • Bernard AB, Jensen JB, Redding SJ, Schott PK (2007) Firms in international trade. J Econ Perspect 21(3):105–130

    Article  Google Scholar 

  • Black DA, Smith JA (2004) How robust is the evidence on the effects of college quality? Evidence from Matching. J Econom 121(1–2):99–124

    Article  Google Scholar 

  • Bloom M, Draca M, Van Reenen J (2016) Trade induced technical change? The Impact of Chinese imports on innovation, IT and productivity. Rev Econ Stud 83(1):87–117

    Article  Google Scholar 

  • Bustos P (2011) Trade liberalization, exports, and technology upgrading: evidence on the impact of MERCOSUR on Argentinian Firms. Am Econ Rev 101(1):304–340

    Article  Google Scholar 

  • Caliendo M, Kopeinig S (2008) Some practical guidance for the implementation of propensity score matching. J Econ Surv 22(1):31–72

    Article  Google Scholar 

  • Card D, Heining J, Kline P (2015) CHK effects. FDZ Methodenreport, No. 06/2015, Nuremberg

  • Charfeddine L, Mrabet Z (2015) Trade liberalization and relative employment: further evidence from Tunisia. Eurasian Bus Rev 5(1):173–203

    Article  Google Scholar 

  • Clerides SK, Lach S, Tybout JR (1998) Is learning-by-exporting important? Micro-dynamic evidence from Colombia, Mexico and Morocco. Quart J Econ 113(3):903–947

    Article  Google Scholar 

  • Dauth W, Findeisen S, Suedekum J (2014) The rise of the east and the far east. J Eur Econ Assoc 12(6):1643–1675

    Article  Google Scholar 

  • Dauth W, Findeisen S, Suedekum J (2018) Adjusting to globalization in Germany. IZA Discussion Paper, 11299

  • Delgado M, Farinas JC, Ruano S (2002) Firm productivity and export markets: a nonparametric approach. J Int Econ 57(2):397–422

    Article  Google Scholar 

  • Desjonqueres T, Machin S, Van Reenen J (1999) Another nail in the coffin? Or can the trade based explanation of changing skill structures be resurrected? Scand J Econ 101(4):533–554

    Article  Google Scholar 

  • Eberle J, Schmucker A (2017) The establishment history panel—redesign and update 2016. Jahrbücher Für Nationalökonomie Und Statistik 237(6):535–547

    Article  Google Scholar 

  • Fajnzylber P, Fernandez A (2009) International economic activities and skilled labor demand: evidence from Brazil and China. Appl Econ 41(5):563–577

    Article  Google Scholar 

  • Fieler AC, Eslava M, Xu D (2014) Trade, quality upgrading, and input linkages: theory and evidence from Colombia. Am Econ Rev 108(1):109–146

    Article  Google Scholar 

  • Fischer G, Janik F, Müller D, Schmucker A (2008) The IAB establishment panel—from sample to survey to projection. FDZ Methodenreport, No. 01/2008, Nuremberg

  • Fischer G, Janik F, Müller D, Schmucker A (2009) The IAB establishment panel—things users should know. J Appl Soc Sci Stud 129:133–148

    Google Scholar 

  • Freedman DA, Berk RA (2008) Weighting regressions by propensity scores. Eval Rev 32(4):392–409

    Article  Google Scholar 

  • Freeman R, Revenga A (1999) How much das LDC trade affected Western job markets? In: Dewatripont N, Sapir A, Sekkat K (eds) Trade and jobs in Europe: much ado about nothing? Oxford University Press, Oxford

    Google Scholar 

  • Gallego F (2012) Skill premium in Chile: studying skill upgrading in the south. World Dev 40(3):594–609

    Article  Google Scholar 

  • Garcia-Marin A, Voigtländer N (2019) Exporting and plant-level efficiency gains: it’s in the measure. J Polit Econ 127(4):1777–1825

    Article  Google Scholar 

  • Goldin C, Katz LF (1998) The origins of technology-skill complementarity. Q J Econ 113(3):693–732

    Article  Google Scholar 

  • Grönroos C (1999) Internationalization strategies for services. J Serv Mark 13(4/5):290–297

    Article  Google Scholar 

  • Grönroos C (2016) Internationalization strategies for services: a retrospective. J Serv Mark 30(2):129–132

    Article  Google Scholar 

  • Groshen EL (1991) Five reasons why wages vary among employers. Ind Relat 30(3):350–381

    Article  Google Scholar 

  • Hahn CH, Choi Y-S (2017) Trade liberalisation and the wage skill premium in Korean manufacturing plants: Do plants’ R&D and investment Matter? World Econ 40(6):1214–1232

    Article  Google Scholar 

  • Haile G, Srour I, Vivarelli M (2017) Imported technology and manufacturing employment in Ethiopia. Eurasian Bus Rev 7(1):1–23

    Article  Google Scholar 

  • Hamermesh DS (1993) Labor demand. Princeton University Press, Princeton

    Book  Google Scholar 

  • Harrigan J, Reshef A (2015) Skill-biased heterogeneous firms, trade liberalization and the skill premium. Can J Econ/revue Canadienne D’économique 48(3):1024–1066

    Article  Google Scholar 

  • Helpman E, Itskhoki O, Muendler MA (2017) Trade and inequality: from theory to estimation. Rev Econ Stud 84(1):357–405

    Article  Google Scholar 

  • Hirano K, Imbens GW (2001) Estimation of causal effects using propensity score weighting: an application to data on right heart catheterization. Health Serv Outcomes Res Method 2(3–4):259–278

    Article  Google Scholar 

  • Katz LF, Murphy KM (1992) Changes in relative wages, 1963–1987: supply and demand factors. Q J Econ 107(1):35–78

    Article  Google Scholar 

  • Krusell P, Ohanian LE, Ríos-Rull J-V (2000) Capital-skill complementarity and inequality: a macroeconomic analysis. Econometrica 68:1029–1054

    Article  Google Scholar 

  • Lichter A, Peichl A, Siegloch S (2015) The own-wage elasticity of labor demand: a meta-regression analysis. Eur Econ Rev 80:94–119

    Article  Google Scholar 

  • Lichter A, Peichl A, Siegloch S (2017) Exporting and labor demand: micro-level evidence from Germany. Can J Econ/revue Canadienne D’économique 50(4):1161–1189

    Article  Google Scholar 

  • Machin S, Van Reenen J (1998) Technology and changes in skill structure: Evidence from seven OECD countries. Quart J Econ 113:1215–1244

    Article  Google Scholar 

  • Melitz MJ (2003) The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71(6):1695–1725

    Article  Google Scholar 

  • Melitz MJ, Redding SJ (2014) Heterogeneous firms and trade. Handb Int Econ 4:1–54

    Article  Google Scholar 

  • Meschi E, Taymaz E, Vivarelli M (2016) Globalization, technological change and labor demand: a firm-level analysis for Turkey. Rev World Econ 152(4):655–680

    Article  Google Scholar 

  • Miozzo M, Soete L (2001) Internationalization of services: a technological perspective. Technol Forecast Soc Chang 67(2–3):159–185

    Article  Google Scholar 

  • Pavcnik N (2002) Trade liberalization, exit, and productivity improvements: evidence from Chilean plants. Rev Econ Stud 69(1):245–276

    Article  Google Scholar 

  • Pla-Barber J, Ghauri PN (2012) Internationalization of service industry firms: under-standing distinctive characteristics. Serv Ind J 32(7):1007–1010

    Article  Google Scholar 

  • Rosenbaum PR, Rubin DB (1985) Constructing a control group using multivariate matched sampling methods that incorporate the propensity score. Am Stat 39(1):33–38

    Google Scholar 

  • Roy AD (1951) Some thoughts on the distribution of earnings. Oxf Econ Pap 3(2):135–146

    Article  Google Scholar 

  • Rubin DB (1974) Estimating causal effects of treatments in randomized and nonrandomized studies. J Educ Psychol 66(5):688–701

    Article  Google Scholar 

  • Van Reenen J (2011) Wage inequality, technology and trade: 21st century evidence. Labour Econ 18(6):730–741

    Article  Google Scholar 

  • Verhoogen E (2008) Trade, quality upgrading and wage inequality in the Mexican manufacturing sector. Quart J Econ 123(2):489–530

    Article  Google Scholar 

  • Wagner J (2002) The causal effects of exports on firm size and labor productivity: first evidence from a matching approach. Econ Lett 77(2):287–292

    Article  Google Scholar 

  • Wagner J (2011) Exports and firm characteristics in Germany: a survey of empirical studies (1991 to 2011). Appl Econ Q 57(2):145–160

    Article  Google Scholar 

  • Wood A (1995) How trade hurt unskilled workers. J Econ Perspect 9(3):57–80

    Article  Google Scholar 

  • Wood A (2018) The 1990s trade and wages debate in retrospect. World Econ 41(4):975–999

    Article  Google Scholar 

  • Wooldridge JM (2010) Econometric analysis of cross section and panel data, 2nd edn. MIT Press, Cambridge

    Google Scholar 

Download references

Acknowledgements

None.

Funding

The authors declare that there is no funding.

Author information

Authors and Affiliations

  1. Berlin School of Economics and Law, Alt-Friedrichsfelde 60, 10315, Berlin, Germany

    Arnd Kölling & Antje Mertens

Authors
  1. Arnd Kölling
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Antje Mertens
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

This study was exclusively prepared by the authors.

Corresponding author

Correspondence to Arnd Kölling.

Ethics declarations

Conflict of interest

The authors declare that they have no competing interests.

Additional information

Responsible Editor: Fritz Breuss.

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary file1 (DOCX 70 kb)

Appendix

Appendix

This study uses the IAB Establishment. See Tables 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18, and 19.

Table 11 Lag structures
Full size table
Table 12 Relative changes in low skilled employment
Full size table
Table 13 Relative changes in medium skilled employment
Full size table
Table 14 Relative changes in high skilled employment
Full size table
Table 15 Descriptive statistics.
Full size table
Table 16 Conditional difference-in-differences regressions for different skill levels in manufacturing (first differences between t and t-2, unlagged export variable, weighted).
Full size table
Table 17 Conditional difference-in-differences regressions for different skill levels in services (first differences between t and t-2, unlagged export variable, weighted).
Full size table
Table 18 Conditional difference-in-differences regressions for different skill levels in manufacturing (first differences between t and t − 2, forwarded export variable, weighted).
Full size table
Table 19 Conditional difference-in-differences regressions for different skill levels in services (first differences between t and t − 2, forwarded export variable, weighted).
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Kölling, A., Mertens, A. Export activities and the demand for skills in German businesses. Empirica 49, 189–223 (2022). https://doi.org/10.1007/s10663-021-09520-x

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10663-021-09520-x

Keywords

JEL Classification

Search

Navigation