In this paper, I present direct micro-econometric evidence of the
relation between individual wages of French workers and the import behavior of
their employing firms. I use a simple bargaining model to examine the impact
of firms’ imports on workers’ wages, in particular the effect of movements in
the quasi-rent induced by competitive pressures. To estimate this model, I use a
unique matched employer-employee data source that contains information on firms
inputs, including imports by type of product and by country of origin, as well as
individual characteristics of a representative sample of workers employed at those
firms. Because the quasi-rent - a firm-level variable - and seniority - a personlevel
variable directly affected by import competition are endogenous in the wage
equation, I use export prices of US firms to various destinations as instruments.
To summarize my results, I find a bargaining power below 0.20. I also show
that workers’ wages deteriorate through competitive pressures. Two effects are
at play. In industries where firms actively import finished goods, workers’ wage
is decreased. But, firm’s own imports of the same goods "protect" its workers
through a hold-up type effect. The total impact is negative for most workers.
Highly educated workers appear to benefit from trade, in stark contrast with
less educated workers. Also, very experienced workers, when still employed in
manufacturing firms, appear to benefit from the protection effect but to be most
affected by the firm’s competitors imports.