How did globalization affect the job biographies of German manufacturing workers?, by Wolfgang Dauth, Sebastian Findeisen, and Jens Südekum: What are the labor market effects of globalization? This question dates back, at least, to the seminal work by Stolper and Samuelson (1941), but even today relatively little is known about the micro-level impacts of trade shocks on the job biographies of single workers. How are different individuals affected? Does it depend on their initial sectoral affiliation, location, and personal characteristics? Do they systematically adjust to globalization by moving across industries, regions, or plants to mitigate import shocks or to benefit from export opportunities? Does this endogenous mobility occur smoothly, or does it involve disruptive unemployment spells? And what are the cumulated long-run effects of trade shocks? These are central concerns for policymakers who worry about the distributive consequences of trade liberalizations. ...
Moving forward to the conclusion:
Summing up, our key insight is that German manufacturing workers benefited at large from this particular globalization episode. Yet, there have been winners and losers. Moreover, we find that individuals systematically adjust to globalization, and we discover a notable asymmetry in the individual labor market response to positive and negative shocks.
Trade shocks do not seem to trigger much ‘voluntary’ sorting from import-competing to export-oriented manufacturing industries. The patterns we observe in the data are more consistent with a type of mobility that is ‘forced’ by job displacement and unemployment. The push effects out of import-competing manufacturing industries are not mirrored by comparable pull effects into export-oriented branches. Often, the direction of the move is to the service sector.
We also find strong heterogeneity across different types of workers. Younger and less-skilled individuals, for example, are hit harder by import shocks but also benefit more from export opportunities. Women and men are affected similarly from import penetration, but men seem to materialize the benefits of rising export exposure better than women, thereby fueling the gender-wage gap. The basic upshot is that trade causes strong distributional effects in the German labor market, and our micro-level empirical findings might be informative for policymakers to design targeted policies that aim at those who benefit the least from globalization.