Abstract: This work analyses whether immigrant workers help firms smooth the effects of Chinese import competition on both the intensive and the extensive margin of sales. In particular, we study whether the sales’ growth rate as well as the survival rate of firms in the industry-market combinations that they serve, are less negatively affected by an increase in industry-level Chinese competition, when the firms employ foreign workers. The contribution of this work is twofold. First, it focuses on firms' sales growth in each market-industry, while most of the previous literature has focused on aggregated employment effects of an increase in import competition. Second, it investigates whether the traditional channels through which immigrant workers foster the first moment of trade, namely a trade-cost and a productivity channel, help to explain firms' resilience to trade shocks. We use a sample of French manufacturing firms from 1994 to 2015 with an IV-2SLS strategy. Both in terms of sales’ growth rate and firms’ survival rate, we find a negative and significant effect of an industry-level import competition shock, and a positive and significant effect of the interaction between the trade shock and the immigration variable.

For more details please send an e-mail to Xiaojing Zhou at xiaojing.zhou@graduateinstitute.ch .