This study examines whether non-native workers contribute to firms’ export growth, using matched data spanning nearly three decades and covering the entire workforce and all manufacturing firms. The estimation strategy relies on the timing of a firm’s first non-native hire, constructing counterfactuals from otherwise similar firms that hire non-native workers a few years later. The results indicate that non-native employment is associated with increased total exports, greater trade with workers’ home countries, and a higher number of exported products. These findings remain robust when addressing potential endogeneity concerns, such as the simultaneity of hiring decisions and broader export growth strategies.

Keywords: Exports, Firm-level; Hiring; Immigrant; Trade 

R&R requested

This study examines the relationship between immigration and firm-level innovation in the Finnish manufacturing sector. The analysis leverages unique matched data, including employees’ immigration status, firm-level patenting, process and product innovation activities, and innovation inputs spanning the 2000-2018 period. To address the potential endogeneity of a firm’s immigrant employment, an instrumental variables approach is employed using the historical geographic distribution of immigrants in the region where the firm is located. The results reveal that an increase in immigrant employment positively influences process and product innovation, and skilled foreign knowledge boosts the number of patent applications. Additionally, immigration leads to reduced external R&D expenditures, indicating that immigrant workers may substitute outsourced innovation inputs. The study also finds no evidence that immigration adversely affects native workers’ employment in Finnish firms. By contrast, it may benefit natives with complementary skills.

Keywords: Firm-level; Immigration; Innovation 

R&R requested

This paper analyzes how firms with different financial strength levels respond to demand shocks in their export markets. We utilize unique administrative datasets of Swedish and Finnish firms matched with national customs data from 1999 to 2014, which allows us to analyze the effects of several macroeconomic shocks affecting the export product demand and performance of exporting firms. We find that financially stronger export firms are better positioned during both positive and negative demand shocks—suffering less from the negative shocks, benefiting more from the positive shocks. While our results suggest that Swedish and Finnish firms tend to respond similarly to different export demand shocks, there are some salient differences in their survival strategies. While the financially stronger Swedish firms expanded their product lines and market areas, the Finnish firms did not make such adjustments during the 2007–2014 period of negative export demand shocks. By analyzing the firm-level survival strategies on export markets, we provide new insights into the divergent export growth trends of the two countries. (with K. Nilsson Hakkala and Z. El-Sahli) (JEL: F14, F61, L11, L25, D22 )

Keywords: Export competition, Financial strength, Firm-level, Trade flows

R&R requested

Using linked employer-employee data combined with administrative debt enforcement records, we analyze how job loss affects debt problems in Finland, where up to 50% of income may be garnished for 25 years. Job loss from plant closures and mass layoffs increases the probability of enforced debt by approximately 10%, with the effects lasting at least a decade. The impact is particularly large for unpaid taxes and private debts like installment payments, and among those with high pre-existing overall debt. We also document spillover effects on spouses and children, indicating broader household consequences, but no significant impact on personal bankruptcy filings. (with O. Tahvonen, H. Karhunen and O. Kanninen) (JEL: D14, G51, J64, J65) 

Keywords: Default; Debt enforcement; Involuntary job loss; Employer-employee data   

Submitted

Energy efficiency is a major policy priority and essential for reducing environmental impacts while fostering sustainable development. However, different theories offer varied perspectives on whether improvements in energy efficiency or stringent environmental regulations impose additional burdens on firms, potentially affecting their productivity. This study analyzes the effect of energy efficiency on productivity in the Finnish energy-intensive sectors. We utilize unique firm-level administrative data covering energy usage over a 20-year period. To identify the effects of energy efficiency, we employ an instrumental variable approach, leveraging a shift-share instrument based on firm-specific energy source prices. Our findings reveal that firms with higher energy efficiency demonstrate stronger productivity. Specifically, a 10% increase in energy efficiency leads to a 1.3% improvement in labor productivity. The results remain robust across different specifications, such as using total factor productivity as an alternative outcome. However, the link between energy efficiency and productivity can plausibly be attributed to the complementarity between energy and labor, thus leading to a reduction in employment. (with N. Kuosmanen)

Keywords: Carbon productivity, energy efficiency, firm-level data, instrument variable approach, labor productivity

Submitted

This study examines whether immigrants are more likely to be laid off during establishment downsizings. It utilizes nationwide administrative FOLK module data matched with the Harmonized Structure of Earnings Statistics (HSES) from Statistics Finland. The target population includes individuals employed in private sector establishments with at least 20 employees, where the workforce was subsequently reduced by at least 20% by the end of the following year (2004-2021; N = 166,333 person-years; aged 25-59; N = 7,378 establishments). Individuals are defined as dismissed if they are no longer employed at the same establishment following downsizing. Using a linear regression model with workplace fixed effects and controlling for background characteristics that could influence the order of dismissal in collective redundancies, the results show that immigrants are no more likely to be dismissed than native workers. Further analyses confirmed the robustness of this finding across various model specifications and across heterogeneous worker subgroups. The study concludes that Finnish establishments do not discriminate against workers with a foreign background during downsizing.

Keywords: Establishment downsizing, Discrimination, Immigrants

We use employer-employee data matched with production, international trade and customs data to examine the effect of China trade shocks on long term labor market outcomes of manufacturing workers in Finland. As for exogenous trade shocks, we utilize the China WTO membership that differentially impacted Finnish firms depending on their pre-existing import and export patterns. We also build a more general model that includes all trade shocks during the past 2001 period. Our results show that manufacturing workers exposed to China trade experience a significant and persistent decline in wages and employment. Trade also causes increase in worker’s school enrollment particularly among abstract or routine workers. Interestingly, routine cognitive workers adapt more easily from displacement as they can move to high-paying abstract occupations, while routine manual workers are more likely to drop into low-paying non-routine manual jobs. (JEL: F16, F66, J24, J31, J60). With S. Pekkala Kerr

 Keywords: Trade shocks, globalization, earnings trajectories, skill upgrading, occupational mobility, unemployment, productivity, China

Increased availability of pain killers has contributed to a growing non-medical use of opioids in OECD countries, including the US and Finland. Using comprehensive administrative data for Finland, we examine how job displacement affects opioid use, and how the effects are moderated by individual’s labor market status. We find that job displacement increases opioid use by approximately 2% from the mean of ~1.20 defined daily doses. This effect also exists among individuals who did not use opioids previously, but the effect is highest (4-9%) among those who already used opioids before losing their job. The results thus indicate that job loss increases the use of opioids both at the extensive and the intensive margins of adjustment. Transition from work to more permanent inactivity after displacement is associated with even greater increase (9-15%) in the use of opioids especially among routine manual workers. In contrast, re-employment may protect individuals from such risky health behaviors. (JEL: I12, J62, J64). (With M. Haapanen, P. Böckerman and H. Karhunen.)

 Keywords: opioids, displacement, occupational mobility