Worker Composition and Export Decision: Evidence from Colombia

In this paper, micro-level evidence on the link between trade and labor markets is provided using annual plant level data from Colombia. At the firm level, the manifestation of the observed relationship between trade and changing labor market conditions would be differing worker compositions between exporting and non-exporting firms. Specifically, two dimensions are considered: fraction of unskilled workers and fraction of female workers within the workforce. While the unskilled ratio has declined and female ratio has increased we demonstrate that changes in both of these ratios are concentrated in firms that export or start exporting in the period investigated. Next, the relationship is analyzed in an econometric model. The results indicate that the existing worker composition affect consequent export decisions of the firms, suggesting adjustment costs in worker composition. Where the results are statistically significant, unskilled ratio decreases the probability of exporting, while the female ratio increases it. On the other side, there is some evidence that unskilled ratio affects efficiency of the firm, while the relationship between female ratio and efficiency is weak.