Firm Internal Organization and Trade

BRAMBILLA, IRENE; CÉSAR, ANDRÉS; FALCONE, GUILLERMO ENRIQUE; PORTO, GUIDO

La Plata

Congreso; LIII Asociación Argentina de Economía Política; 2018

This paper studies the causal effect of foreign demand shocks on firminternal reorganization. Using panel-data for Chilean manufacturing firmsand administrative customs records, we find that exogenous shifts in export opportunities induce some firms to reorganize their hierarchical structure. In particular, a positive/negative export demand shock increases/decreases the number of hierarchical layers chosen by firms. Thiseffect is significant only for ?ocasional exporters?, that is, for firms that areentering and exiting the export market during the sample period. We showthat adding/droping a higher hierarchical layer is associated with decreasing/increasing wages in preexisting layers. Given that, firm´s reorganization through changes in the number of layers induced by trade shocksmay have implications on within-firm wage inequality.