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Exports and labor costs: Evidence from a French Policy

Abstract : 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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Submitted on : Thursday, October 21, 2021 - 5:50:31 PM
Last modification on : Monday, March 21, 2022 - 2:50:39 PM
Long-term archiving on: : Saturday, January 22, 2022 - 8:04:03 PM

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Clément Malgouyres, Thierry Mayer. Exports and labor costs: Evidence from a French Policy. Review of World Economics, Springer Verlag, 2018, 154 (3), pp.429 - 454. ⟨10.1007/s10290-018-0320-x⟩. ⟨hal-03391928⟩

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