Professor Fabrizio Colella received the Ezio Tarantelli Prize
Institutional Communication Service
Fabrizio Colella, Assistant Professor at the Faculty of Economics of Università della Svizzera italiana (USI), received the Ezio Tarantelli Prize - awarded annually by the Italian Association of Labour Economics (AIEL) - for his paper "The Effect of Trade on Skill Requirements: Evidence from Job Postings".
In his study, Professor Fabrizio Colella examined the effects of the Swiss National Bank's (SNB) abandonment of the exchange rate floor with the Euro in 2015, which resulted in a 15% increase in the value of the Swiss franc. "This unforeseen appreciation immediately impacted the relative price of trade", explains Professor Colella in the introduction to his paper, "creating new incentives to import while simultaneously reducing expected profits for firms exposed to foreign competition. My study analyses how this sharp change in trade conditions affected skill requirements in Switzerland, using novel data on trade and labour demand. Specifically, I merge trade data containing information on each import or export transaction made by Swiss firms, with firm-specific job posting data".
The USI professor's hypothesis—which proved correct—suggested that the economic conditions triggered by fluctuating exchange rates incentivised Swiss firms to "offshore parts of their value chains or increase imports of foreign capital inputs". This shift, in turn, could lead to an increased demand for highly skilled labour.
The winner of the Ezio Tarantelli Prize drew three main conclusions from his study: "First, I demonstrate that firm imports positively correlate with job postings for non-routine jobs and IT skills. In contrast, imports negatively affect the demand for manufacturing skills, traditionally linked to the main activity of most firms in the sample. Second, I show that firms that were positively exposed to substitutability reacted to the shock (following the SNB's decision to abandon the Euro exchange rate floor) by importing more and by increasing their demand for skilled labour. Third, I quantify the effects of exposure-induced-imports to labour demand".
Established in 1995, the Ezio Tarantelli Prize is awarded to the author(s) of the best paper presented at the Annual Conference. The AIEL Executive Committee unanimously awarded the 2023 Prize to Professor Colella for his paper, presented at the 2023 Conference, as "the paper relies on a unique dataset that combines detailed firm-level import and export transaction data with job postings that reflect firms' labour demand. It develops a novel measure of firms' exposure to the currency shock and classifies them accordingly". The AIEL Executive Committee deemed Professor Colella's paper "highly deserving of the Tarantelli Prize due to its rigorous methodological approach, use of high-quality original data, and significant contribution to understanding how trade affects labor market outcomes and skill requirements".
