Banque Nationale De Belgique Sa · EURONEXT:BNB
Banque Nationale De Belgique Sa — Investor Presentation (April 2012)
54 slides from Banque Nationale De Belgique Sa's investor presentation, April 2012
Slide 1: Firm-to-Firm Trade: Imports, Exports, and the Labor Market
Firm-to-Firm Trade: Imports, Exports, and the Labor Market Jonathan Eaton, Samuel Kortum, Francis Kramarz, and Raul Sampognaro April 2012 Brussels
Slide 2: Agenda
Agenda Use data on French exporters/importers and their wages Display the detailed evidence. Extend the EKK version of Melitz to look at imports and exports Introduce labor markets (wages and employment) Combine e¢ cient bargaining with …rm export/import behavior Relate parameters of the model to th
Slide 3: Related Literature
Related Literature Data: Bernard and Jensen (1995). Theory (on exports): Felbermayr, Prat, and Shmerer (2008), Egger and Kreickemeier (2009), Helpman, Itskhoki, and Redding (2010), Caliendo, Rossi-Hansberg (2012) Quantitative: Irarrazabal, Moxnes, and Ulltveit-Moe (2010), Klein, Moser, and Urban (20
Slide 4: A Look at the Data
A Look at the Data Cross-section of 141,000 French manufacturing …rms, in 2003 Approximately 25,000 (20,000) of them export (import from) somewhere. Observe exports to (imports from) each of 112 destinations (origins) plus wages, employment (by skill-levels), purchases, and sales in France. Tables a
Slide 5: Exports and Sales in France
average sales in France average sales in France 50000 500000 5000 Exports and Sales in France Sales in France and Exports 1, 2 4 8 1% 2 o minimum number of countries Sales in France and Nbr. of Importers Fite ~ average sales in France percentile of sales in France 50000 500000 5000 500 5000 50000500
Slide 6: Imports and Sales in France
Imports and Sales in France Sales in France and Imports average sales in France 5000 50000500000 Sales in France and # of Partners aati aati in France 5000 00500000 1 2 4 8 1% 32 64 minimum number of sourcing countries 15 150 1500 15000 150000 # firms importing from k or more markets Sales in France
Slide 7: Distribution of Sales in France by Export Country
Sales in France 500 5000 50000 Distribution of Sales in France by Export Country bel fra e 500 500050000 Sales in France Sales in France 500 5000 50000 e 5 1 2 40 sooo 5 1 20 40 80100 a fraction of firms selling at least that much fraction of firms selling at least that much ire us 500 500050000 Sal
Slide 8: Distribution of Sales in France by Import Country
Sales in France 500 5000 50000 Distribution of Sales in France by Import Country bel fra 3 e e g e e e es ee He ee Lo £8 8 8 1 1 1 1 + TT r 1 1 + r 4 1 5 10 20 40 80100 1 5 10 20 40 80100 fraction of firms selling at least that much fraction of firms selling at least that much us ire e e Sales in Fr
Slide 9: Sales in France and Imported Intermediate Goods Intensity
Sales in France and Imported Intemediate Goods Intensity 4 08 i 1 te Goods Use in France 06 .04 1 .02 i Avg. Foreign Intermedia 1 5 10 20 40 80 100 fraction of firms selling at least that much in France
Slide 10: Distribution of Wages by Export Market
1.5 225 1 Wages in France 15 22.5 1 Wages in France Distribution of Wages by Export Market bel fra e e e e Wages in France 5 e 1 1522.5 e e T T T T TT T T T T TT 5 10 20 40 80100 5 10 20 40 80100 a4 fraction of firms with wage at least that much fraction of firms with wage at least that much ire us
Slide 11: Distribution of Wages by Import Country
Distribution of Wages by Import Country bel fra le Q N ee al° ce gn © ee ge © eee o ost Ee gL a7 £ o o & Lan Es 2° H e T T T T T TT T T T T TT 1 5 10 20 40 80100 1 5 10 20 40 s8m00 wo- : fraction of firms with wage at least that much fraction of firms with wage at least that much ire us o wole wo le
Slide 12: Sales in France and Wages
Avg. Wage in France 1.3 1.2 1 Sales in France and Wages T T T T 5 10 20 40 fractio of firms selling at least that much in France TT 80 100
Slide 13: Exports and Wages in France
average hourly wage in France average hourly wage in France 15 2 Exports and Wages in France Wages in France and Exports T 150 1500 15000 # of firms exporting to the market 450000 average hourly wage in France percentile of hourly wage in France Wages in France and Nbr. of Countries nN 15 wat, 15 15
Slide 14: Imports and Wages in France
average hourly wage in France average hourly wage in France 15 Imports and Wages in France Wages in France and Imports + 2 4 8 % 32 6 minimum number of countries Wages in France and Nbr. of Importers 150 1500 15000 150000 # of firms importing from the market average hourly wage in France percentile
Slide 15: Exports and Average Hourly Wage: Administrative and commercial managers
Exports and Average Hourly Wage Administrative and commercial managers 8 s Wages and Markets Penetrated 8 Wages and Markets Penetrated ro N & Nn ry ee £ ox 0 7 $ oe ge = de eee 0 cc ccce = ~ a a > s ° T T T T T T T T 1 =£ 4 2 4 8 t 32 @& 1 § __— ° a minimum number of markets penetrated = : : : : e -
Slide 16: Imports and Average Hourly Wage: Administrative and commercial managers
Imports and Average Hourly Wage Administrative and commercial managers e Wages and Nbr. of Sourcing Countries: gWages and Nbr. of Sourcing Countries uw s om & & re ai — MQ | KKK, ween > Oo Sp Sde e eece RB cr o = CMeccsce £ i 2 4 8 % 32 64 128 3 lt a minimum number of import countries > : : : ; - 10
Slide 17: Exports and Average Hourly Wage: Technical managers and engineers
Exports and Average Hourly Wage Technical managers and engineers 8 s Wages and Markets Penetrated 8 Wages and Markets Penetrated = nN & N ge ee £ Ss RS __— oe > m; Sse e ecce = ~ an 3° T T T T T T T T a 5 1 2 4 +8 16 32 64 128 3 ; a minimum number of markets penetrated 2 > : : : : e - 100 1000 10000
Slide 18: Imports and Average Hourly Wage: Technical managers and engineers
Imports and Average Hourly Wage Technical managers and engineers france Wages and Nbr. of Sourcing Countries gWages and Nbr. of Sourcing Countries = a & | * 100, go _——_ “ao ies Xxx a ae IIR —_ = aL S ee 0 occeremae Hee z F 5 y 8 1 2 G2 13a § | “emmmorereerseces, eoce ee 2 minimum number of import c
Slide 19: Exports and Average Hourly Wage: Skilled blue-collar workers
Exports and Average Hourly Wage Skilled blue-collar workers (non-crafts) 8 s Wages and Markets Penetrated 8 Wages and Markets Penetrated © N fa a wu He ee £ v ae ow 5 _ a e- g-Je e e000 = “ Mee 2 T T T T T T T T = 5 1 2 4 8 16 32 64 128 3 e 3 minimum number of markets penetrated £- : : : , e : = 100
Slide 20: Imports and Average Hourly Wage: Skilled blue-collar workers
Imports and Average Hourly Wage Skilled blue-collar workers (non-crafts) Trance Wages and Nbr. of Sourcing Countries gWages and Nbr. of Sourcing Countries va c lee Ad 3 te £ ee = vee 0 et ro * x = PT nd 2 ey 2 ° T T T T T T T = “Comoe ce scccce005, Su 2 4 8 16 32 64 128 3 Pecce e a minimum number of
Slide 21: Exports and Average Hourly Wage: Unskilled blue-collar workers
Exports and Average Hourly Wage Unskilled blue-collar workers (non-crafts) 8 s Wages and Markets Penetrated 8 Wages and Markets Penetrated Nn fa & wu Be ee £ aa ee a ow > ; a su Sule e eece 2 aed ran 3.4 —T 1 — 1 1 = LL = 1 2 4 8 1 32 6 128 3 e z minimum number of markets penetrated 2 - : : , , e ;
Slide 22: Imports and Average Hourly Wage: Unskilled blue-collar workers
Imports and Average Hourly Wage Unskilled blue-collar workers (non-crafts) Trance Wages and Nbr. of Sourcing Countries gWages and Nbr. of Sourcing Countries rc — & “0 7 hy ee : etree = e e @ @ee0e = 7 e « 34 1 r 1 1 1 T 1 Z| ~ Pemecsccescccscoes, . = 1 2 4 8 16 32 64 128 3 phd TY za minimum number o
Slide 23: Regression results by number of destinations and origins
Purchases of Purchases of Intermediates in Intermediates/Total Sales France/Total Sales Log Average Hourly Wage Log Employment number of destinations=2 0.0395 0.0350 0.0229 -0.0534 number of destinations=3 0.0501 0.0464 0.0243 -0.0874 number of destinations=4 0.0548 0.0512 0.0341 -0.1178 number of d
Slide 24: Log of hourly wage by skill group
Log of hourly wage Administrative and Engineers, Skilled Blue-Collar Unskilled Blue-Collar Commercial Managers Commercial Engineers number of destinations=2 0.0062 -0.0073 0.0080 0.0079 number of destinations=3 -0.0053 -0.0207 0.0084 0.0189 number of destinations=4 0.0011 -0.0001 0.0109 0.0082 numbe
Slide 25: Share in employment by skill group
Share in employment Administrative and Engineers, Skilled Blue-Collar Unskilled Blue-Collar Commercial Managers Commercial Engineers number of destinations=2 0.0036 0.0043 -0.0023 0.0001 number of destinations=3 0.0022 0.0083 -0.0107 0.0030 number of destinations=4 0.0062 0.0050 -0.0134 0.0082 numbe
Slide 26: Share in wage bill by skill group
Share in wage bill Administrative and Engineers, Skilled Blue-Collar Unskilled Blue-Collar Commercial Managers Commercial Engineers number of destinations=2 0.0060 0.0061 -0.0071 -0.0029 number of destinations=3 0.0046 0.0101 -0.0154 -0.0022 number of destinations=4 0.0094 0.0061 -0.0185 0.0012 numb
Slide 27: Lessons from the Data
Lessons from the Data Imports and Exports are very similar (parallel?) The shapes of the Wage Figures are strikingly similar to those of sales (in EKK), with less variation though Both for Exports and Imports Firms that export (import) more and more widely pay more Firms that serve (are served by) l
Slide 28: Grand Directions of the Model
Grand Directions of the Model Model jointly the Export and Import decisions through a model of Out- sourcing With Multiple Inputs Coming from France or abroad With heterogeneous …rms: e¢ ciency and number of skills (complexity) Introduce e¢ cient bargaining (McDonald and Solow, 1981) for the labor m
Slide 29: Elements of the Model: EKK
Elements of the Model: EKK Firm j has e¢ ciency z (j ); same across markets, and a demand shifter n (j ) in each destination market n, preferences are CES with >1 measure of …rms with e¢ ciency above z is z (z ) = T z : (Hence, dis- tribution of costs is proportional to c ) charging p in market n; r
Slide 30: Revenue as a function of labor, intermediates and reach
Then, revenue as a function of l; m; and f is: !( 1)= z (j )l m1 Pn xn(l; m; f ) = [ n(j )f Xn]1= : dn
Slide 31: EKKS: 2-Inputs and Outsourcing (Base Model)
EKKS: 2-Inputs and Outsourcing (Base Model) The production function uses input 0, cost w0 and has the choice of either labor at cost w1 or an input, at cost p Given prices of intermediates p, the cost of the input bundle is: b(p) = w0 0 min fw1; pg 1 : The distribution of costs: Z 1 Z 1 (c) = (cjb(p
Slide 32: Largest cost entering and supplier sampling
with c, largest cost entering, is solution of: X ( 1) (c) = ; E Extended Model: The number of suppliers j sampled is distributed Pois- son with parameter (c), an increasing function of c. The probability to sample j suppliers is e (c) [ (c)]j gj (c) = j! If Pj is the price of the lowest cost supplie
Slide 33: Summing over suppliers with Pareto distribution
Now, summing over all j s: Z 1 (c) = T c w0 0 min fw1; pg 1e (c)F (p) (c)f (p)dp 0 Plugging the Pareto distribution, we have (c) = (c)c with 2 ! ! w1 1 $1 (c) = 4 (c) 1 (c)($1 =c) 1 ; (c) + e e c c As a consequence, 0 1 c w1 w1 c B @ (c) @ (c) C B 1 encounter C @ @c = 0 @c < 0A @ (c) @ (c) Poisson (
Slide 34: Choice implying a drop increases entry
As long as our choice of (c) implies that 0 (c) 0 we are guaranteed that a drop in E increases (c) The expected number of sales E (N s) ; is: E (N s) = exp[ F (c)] A more e¢ cient …rm is more likely to thrive in an environment with more meetings.
Slide 35: EKKS: Sales with 2-Inputs and Outsourcing
EKKS: Sales with 2-Inputs and Outsourcing Expected intermediate sales of a seller in the market with unit cost c; equal to the expected number of buyers (G(c) just derived) times expected sales per buyer. A buyer has e¢ ciency Z which is distributed: Pr[Z z] = 1 z z(c) with z (c) the lowest e¢ cienc
Slide 36: The distribution of expected sales
The distribution of expected sales: 2 0 11 0 13 Z 1 0c 1 0 M (c) = G(c) 61 X @ mw0 A M @ w0 c A7 1 1 4 + 5 [z (c)] z(c) mP1 z 0 0 z All computations done (note the Fixed Point, above) yields: Z c M M c0 1 = def c c0 dc0 0 $1 1m ( X 1) P 1 (c)1 1 exp c = $1 1 1 (1 exp c )
Slide 37: EKKS: Extension to K-Inputs
EKKS: Extension to K -Inputs The …rm samples jk suppliers for k = 1; :::; K , distributed Poisson with a parameter (c) K Z 1 Y (c) = T c w0 0 min fwk ; pk g ke (c)F (pk ) (c)f (pk )dpk k=1 0 = (c)c The measure of entrants is X ( 1) (c) = ; E
Slide 38: Expected intermediate sales
with expected intermediate sales: K X km ( 1) P X c1 1 1 exp (c) $ck M = k=1 K X 1 k 1 exp (c) $ck k=1
Slide 39: EKKS: Introducing Trade I
EKKS: Introducing Trade I All computations above can be extended to a multiplicity of N countries, by dividing appropriately by distance dmn between m and n: For …rms in country i: K Z 1 Y n o 0 k i (ci )Fi (pk ) i (ci ) = Ti wi;0 min wi;k ; pk e i (ci )fi (pk )dpk : k=1 0 With the associated system
Slide 40: EKKS: Introducing Trade II
EKKS: Introducing Trade II Expected sales are: 8 9 K N Xm < m ( 1) = X X c M (c) = Gn;k (c) c d P 1 m ( 1) m n k n mn : R cm M 00 1 00 ; k=1 m=1 + 0 m c c00 dc De…ning M = fc M ; c M ; :::; c M g0 1 1 2 2 N N f= X 1 1 X1c1 ( 1) ; P1 1 X2c2 ( 1) ; :::; P1 1 XN cN ( 1) P1 2 N
Slide 41: Matrix representation and solution
B an N N matrix with representative element: K " #! X $n;k bnm = k nn (cn ) 1 exp n (dmn) k=1 cn The solution is m M= [I B] 1 BX f ( 1)
Slide 42: EKKS: Bargaining on Wages and Employment
EKKS: Bargaining on Wages and Employment The pro…t resulting from above K h X i F )+xM n (l; m; w; ) = xn (l; m; n w0l0;n k wk lk;n + (1 k )pk mk;n k=1 with ek;n is the overhead labor of type k to enter market n implying a K X …xed cost En = wk ek;n k=0 workers and …rm use e¢ cient bargaining and ma
Slide 43: Bargaining power and reservation wage
with 0 1 re‡ects the bargaining power of workers and wk type k workers’reservation wage. Notice that we have assumed a status-quo 0 = 0 for the …rm (to be changed soon). Solutions: the share of the surplus going to labor; K X (wk wk ) ( k lk + ek ) = S (l; m; ); k=0 with the rest going to pro…ts (l;
Slide 44: Intermediates purchased
intermediates purchased: ( 1 w k pk k = 0 w k > pk Finally, @xF (l; m; ) = wk . @lk @xF (l; m; ) = pk :when wk > pk @mk
Slide 45: EKKS: Solution for the Wage with K=1
EKKS: Solution for the Wage with K = 1 The solution ! en (j) 1+( 1) X xn (j) ln(j ) + en(j ) w(j ) = w 1 + w ( 1) en (j) l(j ) + e(j ) ( 1) ( 1) n + w xn (j) The appendix shows that the ratio en(j )=xn(j ) is increasing in vn which implies that en (j) xn (j) ( 1) en (j) w + xn (j) is also increasing
Slide 46: Similarly
Similarly x(j ) X xn(j ) ln(j ) + en(j ) = l(j ) + e(j ) n ln (j ) + en (j ) l(j ) + e(j ) X 1 ln(j ) + en(j ) = ( 1) en (j) l(j ) + e(j ) : n w + xn (j) x(j) whereas l(j) is equal to a constant
Slide 47: Model Fit: Wage and Exports (Gamma=0.0)
wage in France 15 2 1 13 16 1 avg wage in France Model Fit: Wage and Exports Gamma=0.0 , Sigma=3, Thetatilde=2.46 Wage and Markets Penetrated Wage and Markets Penetrated Bua 5 ce _—"J fe Se ee? ee o ee e e eece g 0; 2° Cn see ec ° T T T T T T TT T T T T 1 2 4 8 16 32 64 100 100 1000 10000 500000 min
Slide 48: Model Fit: Wage and Exports (Gamma=0.25)
2 wage in France 15 1 13 16 1 avg wage in France Model Fit: Wage and Exports Gamma=0.25 , Sigma=3, Thetatilde=2.46 Wage and Markets Penetrated Wage and Markets Penetrated Bn 5 frac) lt ae i. ee? ad 2 ce ad rn . . ° T T T T T TT = ~ T T T . ° ° T 1 2 4 8 16 32 64100 100 1000 10000 500000 minimum numb
Slide 49: Model Fit: Wage and Exports (Gamma=0.50)
wage in France 15 2 1 13 1.6 1 avg wage in France Model Fit: Wage and Exports Gamma=0.50 , Sigma=3, Thetatilde=2.46 Wage and Markets Penetrated Wage and Markets Penetrated Bua 5 — ‘ ue eo i eee 7} — e ° ; eee e_ 2 e 1 2 4 8 16 32 64100 100 1000 ~~ 10000 500000 minimum number of markets penetrated #
Slide 50: Model Fit: Wage and Exports (Gamma=0.75)
15 2 wage in France 13° 16 1 1 avg wage in France Model Fit: Wage and Exports Gamma=0.75 , Sigma=3, Thetatilde=2.46 Wage and Markets Penetrated Wage and Markets Penetrated Bn c oa re 3 8 88 2 ts e = e T T T T T T T TT T T T T 1 2 4 8 16 32 64100 100 1000 10000 500000 minimum number of markets penetr
Slide 51: Model Fit: Wage and Exports (Gamma=0.99)
2 wage in France 1.5 1 13 1.6 1 avg wage in France Model Fit: Wage and Exports Gamma=0.99 , Sigma=3, Thetatilde=2.46 Wage and Markets Penetrated Wage and Markets Penetrated Bun c = wo ee eg eee ° 8 e 2 e T T T T T T T TT T T T T 1 2 4 8 16 32 64 100 100 1000 10000 500000 minimum number of markets pe
Slide 52: Sales in France and Wages: model fit
1.4 15 1.3 Wages in France 1.2 1.1 Sales in France and Wages Thetatilde=2.46; Sigma=3 T T T T T T 5) 10 20 40 80 100 fraction of firms selling at least that much ® Gamma=0.25 © Gamma=0.50 ®@ Gamma=0.75 © Gamma=0.99 « Data sTsTa™
Slide 53: Conclusion
Conclusion The EKK model can be “easily extended” to incorporate a parallel treat- ment of exports and imports It involves the construction of a …xed point (imports are in fact exports of some other foreign …rm) The model can be further extended to an open economy, multiple inputs, multiple supplier
Slide 54: On the labor market side, adding one bargaining parameter
On the labor market side, adding one bargaining parameter to an export model goes a long way in relating …rms’wages and exports. Strong evidence that the Pareto distribution of heterogeneity in sales (ef- …ciency) translates into wages. Unobserved individual skills are not accounted for Looks like a
Banque Nationale De Belgique — Investor Presentation (April 2012) on 6ix