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Title page 1

Contents 1

Abstract 3

1. Introduction 4

2. Data 9

3. The average effect of exports on earnings 10

3.1. Empirical specification 10

3.2. Instrument 12

3.3. Average effect of exports on earnings 12

4. Using machine learning to estimate the heterogeneous effects of exports 15

4.1. The generalized random forest 15

4.2. Variables to study heterogeneous earnings effects 16

5. The heterogeneous earnings effects of exports 21

5.1. Individualized effects 21

5.2. Who benefits most and who benefits least from exports? 24

5.3. Accounting for the potential correlation between characteristics 26

5.4. Non-linearity in firm size 29

5.5. What do we miss when focusing on conventional firm- and skill-related variables? 30

5.6. Interpretation and discussion of heterogeneities 32

6. Exports and inequality 35

7. Conclusion 39

References 40

A. Appendix 47

Tables 14

Table 1. The average effect of exports on earnings 14

Table 2. List of variables to estimate heterogeneous effects 20

Table 3. Descriptives of individualized effects 21

Table 4. Explanatory power of conventional firm- and skill-related variables 31

Table 5. Exports and earnings inequality 38

Figures 22

Figure 1. Distribution of individualized effects of exports on earnings 22

Figure 2. Conventional IV, by quartile of machine learning-based estimate 24

Figure 3. Differences in characteristics between top and bottom groups 25

Figure 4. Individualized effects and worker/job/firm characteristics (metric variables) 27

Figure 5. Individualized effect and worker/job/firm characteristics (dummy variables) 28

Figure 6. Link between individualized effects and firm size deciles 30

Figure 7. Conventional IV by quartile of GRF-based estimate, residualized from firm and skill-related variables 32

Figure 8. Earnings effects by initial earnings percentile 37

Appendix Tables 57

Table A.1. Sample descriptives 57

Table A.2/Table A.3. Worker Adjustment 57

Table A.3/Table A.2. Change in exports and imports, by industry 58

Table A.4. Adjustment to Exports: Differences by Gender 58

Table A.5. Descriptives for quartiles of β(xi) 59

Table A.6. Gender differences: the role of differences in characteristics and sorting 59

Table A.7. (Omit) 60

Appendix Figures 47

Figure A.1. The evolution of trade with China and Eastern Europe over time 47

Figure A.2. Distribution of individualized effects: absolute earnings effects 48

Figure A.3. Distribution of individualized effects: OLS Forest 49

Figure A.4. Distribution of individualized t-statistics 50

Figure A.5. Probability of belonging to the bottom quartile and worker/job/firm characteristics (metric variables) 51

Figure A.6. Probability of belonging to the bottom quartile and worker/job/firm characteristics (dummy variables) 52

Figure A.7. Probability of belonging to the top quartile and worker/job/firm characteristics (metric variables) 53

Figure A.8. Probability of belonging to the top quartile and worker/job/firm characteristics (dummy variables) 54

Figure A.9. Interaction effects of worker/job/firm characteristics and export exposure with conventional IV regressions (metric variables) 55

Figure A.10. Interaction effects of worker/job/firm characteristics and export exposure with conventional IV regressions (dummy variables) 56

Figure A.11. Example of a regression tree 61