How did you come to choose your research topic?

The debate on the consequences of globalisation is longstanding but has recently gained renewed attention in light of the current events characterising major economies in Europe and the US. Both international trade and migration have been found to be catalyst factors for this shift towards protectionism and isolationism. With this thesis, I aimed at contributing to a deeper understanding of how international trade and labour migration interact and shape economic outcomes for domestic firms and workers. Because of data quality and availability, my research focuses on France, but the results are informative for other developed economies. I would be, of course, interested in understanding whether the results hold also for developing countries.

Can you describe your PhD essays' research questions and your major findings?

In the first chapter, “Firm-Level Prices, Quality, and Markups: The Role of Immigrant Workers”, I study export quality as a channel through which immigrant workers affect firm-level export prices and markups. The mechanism is that thanks to a better knowledge of the upstream market, immigrant workers help firms overcome informational barriers to sourcing inputs of higher quality from abroad, and therefore produce exports of higher quality.

I show four main results. First, the share of immigrant workers in a local labour market is positively associated with firm-level prices and quality of each exported variety when comparing firms selling the same narrowly defined variety to the same country in the same year. Second, the share of immigrant workers is positively associated with firm-level markups, both within and across firms, and the effect is attributable to price differences. Third, turning to the mechanism explaining the previous results, the presence of immigrant workers is positively associated with firms importing higher-price intermediate inputs, which are also inputs of higher quality. And fourth, only the share of white-collar immigrants matters for this relationship; moreover, the origins of immigrants and imported inputs are related in a manner that is consistent with immigrants having specialised knowledge.

The second chapter, “Immigrant Workers and Firm Resilience on the Export Market”, co-authored with Léa Marchal, investigates whether firms employing immigrant workers are more resilient in their export markets to an increase in competition from a low-wage country such as China. The chapter complements the existing literature by showing that immigrants mitigate trade shocks that are potentially harmful for the economic stability and growth of a country. Results show that an increase in import competition from China negatively affects firm export performance in an industry-destination market. This effect is, however, smaller for firms employing immigrant workers. Additionally, the study provides evidence that the mitigating effect of immigrant workers is stronger for less productive firms and is present even after controlling for the fact that, on average, more productive firms better face an increase in import competition. The study then provides evidence that immigrant workers improve the firm performance and resilience in the export markets thanks to their effect on export costs. It does so by using the share of immigrant workers by country of origin in the district where the firm is located and showing that the mitigation effect is stronger in the export markets that are also the origin country of the immigrant workers. 

The third chapter of my thesis, “When Immigrants Meet Exporters: A Reassessment of the Immigrant Wage Gap”, co-authored with Léa Marchal and Guzmán Ourens, focuses on the consequences of trade activity on workers, and in particular on wage inequality. The study contributes to the literature on trade and wage inequality by investigating theoretically and empirically whether the wage gap between native and immigrant workers depends on the export activity of the employing firms and the occupation of the workers. Existing literature shows that white-collar immigrant workers provide valuable information on the foreign markets served by their employing firms. This study, therefore, posits that they might be able to capture an informational rent that translates into higher wages, hence into a lower wage gap with respect to their native counterparts. The study finds that the wage differential of white-collar workers varies with the export activity of the employing firm: white-collar immigrants employed by high (low) exporting firms earn more (less) than their native counterparts. The same is not true for blue-collar workers, with immigrant workers earning less than native workers along the entire distribution of export activity. These findings are consistent with white-collar immigrant workers capturing an informational rent. The study provides evidence for this mechanism. First, it analyses how the immigrant wage gap varies with the complexity of the firm export activity. Second, it studies how the average wage of immigrant workers from different origin groups varies with the export activity of the employing firm in those same origin regions.

What are you going to do now? 
I will be a post-doc at the Düsseldorf Institute for Competition Economics.

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Giulia Sabbadini defended her PhD thesis, “International Trade and Labour Migration: Evidence from France”, in June 2022. The jury members were Assistant Professor Yuan Zi (chair and internal examinator), Professor Richard Edward Baldwin and Assistant Professor Julia Cajal Grossi (co-supervisors), and Professor Maria Bas (external examinator), Sorbonne Economics Centre, University of Paris 1 Panthéon-Sorbonne, Paris.

Access to the PhD thesis:
Members of the Geneva Graduate Institute can access the PhD thesis on this page of the Institute’s repository. Others may contact Dr Sabbadini at giulia.sabbadini@graduateinstitute.ch.

Citation of the PhD thesis:
Sabbadini, Giulia. “International Trade and Labour Migration: Evidence from France.” PhD thesis, Graduate Institute of International and Development Studies, Geneva, 2022.

Interview by Nathalie Tanner, Research Office.
Banner picture: excerpt from an illustration by Fast_Cyclone/Shutterstock.com.