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Heterogeneous Effect of Exchange Rates on Firms’ Exports: Role of Labor Intensity

Author

Listed:
  • Kurmas Akdogan
  • Yusuf Kenan Bagir
  • Huzeyfe Torun

Abstract

Using an extensive firm-level database that combines balance sheet information, social security registry and customs data, we examine whether the relationship between the exchange rate and exports change with the degree of labor-intensity of production. The results based on manufacturing firms in Turkey suggest that the sensitivity of labor-intensive firms to the exchange rate is higher than that of the less labor-intensive ones, both at the intensive and extensive margins of exports. However, we do not find a significant impact on the export prices varying across the labor-intensity of the firms. Our results are robust to alternative definitions of labor-intensity and exchange rates, and the use of different time spans.

Suggested Citation

  • Kurmas Akdogan & Yusuf Kenan Bagir & Huzeyfe Torun, 2021. "Heterogeneous Effect of Exchange Rates on Firms’ Exports: Role of Labor Intensity," Working Papers 2115, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2115
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2021/21-15
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    Keywords

    Exports; Exchange rates; Labor-intensity;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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