As part of the Brown Bag Lunch series, the International Economics Department at the Graduate Institute is pleased to invite you to a public talk given by Giulia Sabbadini, PhD student in International Economics.

She will present her work titled Firm-Level Prices and Markups: The Role of Immigrant Employment and Input Quality.

Abstract: Exploiting data for French manufacturing exporters and importers, this paper presents evidence of a positive effect of immigrant employment on firm-level markups, which is attributable to price differences.
I start by documenting a number of stylized facts showing that firms use higher quality inputs to produce higher quality final goods, and that the firm-level employment of immigrant workers is positively correlated with both the exports of differentiated final goods, and the imports of differentiated intermediate inputs. I then present econometric evidence supporting the following mechanism: immigrant workers allow firms to access intermediate inputs of higher quality and therefore produce higher quality final goods. This translates into firms charging higher prices, and markups. First, I show that the prices of exported final goods are positively affected by the employment of immigrant workers within narrowly defined varieties. Consistently, I find that immigrant employment positively affects product-level quality of exported final goods. Second, I exploit differences in prices of imported intermediate inputs as an approximation of input quality and show that they are increasing in the employment of immigrant workers. Finally, I provide suggestive evidence that immigrant workers lower upstream information frictions, allowing firms to buy higher quality inputs. I use information on the sourcing countries of intermediate inputs to show that the effect of immigrant workers on firm-level input prices is driven by sourcing countries outside the European Union, where the information frictions are arguably larger.