Firm‐level prices, quality, and markups: The role of immigrant workers

Abstract

AbstractIn this article, I study export quality as a channel through which immigrant workers affect the export prices and markups of French manufacturing firms. I find that the share of immigrant workers in a local labor market is positively associated with firm‐level export prices and quality and that this quality advantage translates to higher markups. I present evidence for the mechanism accounting for these relationships and find that the presence of immigrant workers is positively associated with firms importing higher‐price (higher‐quality) intermediate inputs, which are key to producing higher‐price (higher‐quality) exports. The hypothesized economic mechanism is that immigrant workers help firms overcome informational barriers to sourcing higher‐price (higher‐quality) inputs from abroad. I provide evidence consistent with immigrant workers having specialized knowledge of the upstream market.