Heterogeneous Trade Elasticity and Managerial Skills (Gianluca Orefice)

wiiw-FIW Seminar in International Economics from 22nd September, 2022, presented by Gianluca Orefice (University of Paris-Dauphine), moderated by Mahdi Ghodsi (wiiw).

This paper investigates the role played by firms’ managerial skills on the heterogeneous reaction of exporters to real exchange rate changes. Our empirical analysis relies on detailed firm-product-destination level export data from France for the period 1995-2008 matched with specific information on firms’ skill composition by occupation (managers, R&D workers, professionals and technicians). Our findings show that high-skill intensive firms have larger exporter price elasticity to real exchange rate variations and a lower elasticity of export quantities. While a 10% depreciation of the real exchange rate makes firms with sample-average skill intensity charging 0.5% higher export price, we show that this effect is 40% higher for exporters with one standard deviation larger skill intensity. Managers and R&D workers contribute the most to this heterogeneous pricing-to-market behavior offirms. These findings are robust to controlling for the competing explanations of firm productivity and quality.

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