Adjusting to Globalization in Germany

We study the impact of trade exposure on the job biographies of 2.4 million manufacturing workers in Germany. Rising export opportunities lead to two equally important sources of earnings gains: on the job and employer switches within the same industry. Highly skilled workers benefit the most. Import shocks mostly hurt low-skilled workers, especially when they possess lots of industry-specific human capital. They also destroy workers' rents when separating from high-wage plants, and they leave strongly scarring effects in the event of a mass layoff. We connect our results to the growing theoretical literature on the labor market effects of trade.

Automated summary

The study investigates the impact of trade exposure on the job biographies of 2.4 million manufacturing workers in Germany, finding that rising export opportunities bring about earnings gains for workers through job and employer switches within the same industry. Highly skilled workers benefit the most, while import shocks negatively affect low-skilled workers, especially those with industry-specific human capital. These shocks also have lasting effects on workers' rents and cause significant trauma during mass layoffs. The results are related to the existing theoretical literature on the labor market effects of trade.