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The Impact of New Free Trade Agreements on Incumbent Firms and Workers

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  • Dale-Olsen, Harald

    (Institute for Social Research, Oslo)

Abstract

Trade policies might affect firms' market power and their ability to reap product-market mark-ups. Thus, potentially they influence not only firms' economic performance, but also worker pay. Utilising panel-data on Norwegian Manufacturing exporters from 2005-18 and multi-product production function-estimation techniques and recent development within the literature on dynamic treatment effects in event studies with heterogeneous treatment effects, we show that free-trade agreements increase exports and return-on-assets for Norwegian incumbent exporters, but their mark-ups decline. On average, workers in these established firms benefit from free-trade agreements, but this depends on occupations, union strength and labour market tightness.

Suggested Citation

  • Dale-Olsen, Harald, 2023. "The Impact of New Free Trade Agreements on Incumbent Firms and Workers," IZA Discussion Papers 16649, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16649
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    More about this item

    Keywords

    free-trade agreements; price-cost markups; profits; wages; multiproduct-function-estimation; dynamic treatment effects;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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