https://macropaperwarehouse.com/authors/toshiaki-komatsu/Toshiaki KomatsuHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/firm-responses-and-wage-effects-of-foreign-demand-shocks-with-fixed-labor-costs-and-monopsony/https://macropaperwarehouse.com/papers/firm-responses-and-wage-effects-of-foreign-demand-shocks-with-fixed-labor-costs-and-monopsony/<p><strong>Research Question.</strong> The paper asks three related questions in the context of Belgium, a small open economy: (1) What do firms&rsquo; responses to demand shocks reveal about their cost structures? (2) What are the worker and wage impacts of foreign demand shocks? (3) How sensitive are the aggregate wage effects of foreign demand shifts to firms&rsquo; cost structures and imperfect competition in the labor market?</p> <p><strong>Data.</strong> The analysis combines administrative micro-data from Belgium for 2002–2014, provided by the National Bank of Belgium. The linked dataset covers 995,739 firm-year observations from private, non-financial firms with at least one FTE employee, and integrates: (a) a Business-to-Business (B2B) VAT transactions registry capturing all annual domestic firm-to-firm sales above €250; (b) customs records and intra-EU declarations for imports and exports at the 8-digit product level; (c) annual accounts containing data on sales, labor costs, intermediate inputs, capital, and firm characteristics; and (d) employer-employee matched data from the Belgian social security administration (BCSS) for a random sample of 500,000 workers in firms with 10 or more FTE employees, covering 2003–2014.</p>