Does exporting improve matching? Evidence from French employer-employee data

This paper documents a novel fact about the hiring decisions of exporting firms versus non-exporting firms in a French matched employer-employee dataset. We construct the type of each worker using both a traditional wage regression and a theory-based approach and compute measures of the average worker type and worker type dispersion at the firm level. We find that exporting firms feature a lower type dispersion in the pool of workers they hire. This effect is quantitatively larger than the common finding in the literature that exporters pay higher wages because, among other factors, they employ better workers. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariff shocks. Our findings are consistent with a model of matching between heterogeneous workers and firms in which variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the higher potential value of the relationship. Hence, exporting firms select sets of workers that are less dispersed relative to the average. This analysis is suggestive of the presence of additional gains from trade due to improved sorting. (C) 2018 Published by Elsevier B.V.