Exchange Rate, Employment and Hours: What Firm-Level Data Say

Alberto Pozzolo and Francesco Nucci

Economics & Statistics Discussion Papers from University of Molise, Department of Economics

Abstract: Using a representative panel of manufacturing firms, we estimate the response of job and hours worked to currency swings, showing that it depends primarily on the firm's exposure to foreign sales and its reliance on imported inputs. Further, we show that, for given international orientation, the response to exchange rate fluctuations is magnified when firms exhibit a lower monopoly power and when they face foreign pressure in the domestic market through import penetration. The degree of substitutability between imported and other inputs and the distribution of workers by type introduce additional degrees of specificity in the employment sensitivity to exchange rate swings. Further, wage adjustments are also shown to provide a channel through which firms react to currency shocks. Finally, gross job flows within the firm are found to depend on exchange rate fluctuations, although the effect on job creation is predominant.

Keywords: Employment; Exchange Rate; Firm's Foreign Exposure (search for similar items in EconPapers)
JEL-codes: E24 F16 F31 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2008-10-13
New Economics Papers: this item is included in nep-bec, nep-ifn, nep-lab, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The exchange rate, employment and hours: What firm-level data say (2010)
Working Paper: Exchange Rate, Employment and Hours: What Firm-Level Data Say (2009)
Working Paper: The Exchange Rate, Employment and Hours: What Firm-Level Data Say
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Persistent link: https://EconPapers.repec.org/RePEc:mol:ecsdps:esdp08049

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