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Globalization and Imperfect Labor Market Sorting

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  • Carl Davidson
  • Fredrik Heyman
  • Steven Matusz,
  • Fredrik Sjoholm
  • Susan Zhu

Abstract

This paper focuses on the ability of the labor market to correctly match heterogeneous workers to jobs within a given industry and the role that globalization plays in that process. Using matched worker-firm data from Sweden, we find strong evidence that openness improves the matching between workers and firms in export-oriented industries. This suggests that there may be significant gains from globalization that have not been identified in the past – globalization may improve the efficiency of the matching process in the labor market. On the other hand, we find no evidence that openness affects the degree of matching in import-competing industries. These results remain unchanged after adding controls for technical change at the industry level or measures of domestic anti-competitive regulations and product market competition. In addition, we find no evidence that technical change has any impact on the degree of matching at the industry level. Our results are also robust to alternative measures of the degree of matching, openness, or the trade status of an industry.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 10/30.

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Handle: RePEc:not:notgep:10/30

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Keywords: Matching; Globalization; Firms; Workers; Multinational Enterprises; International Trade;

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Cited by:
  1. Stephen Redding & Oleg Itskhoki & Marc-Andreas Muendler & Elhanan Helpman, 2012. "Trade and Inequality: From Theory to Estimation," 2012 Meeting Papers, Society for Economic Dynamics 135, Society for Economic Dynamics.
  2. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Zhu, Susan Chun, 2012. "Liberalized Trade and Worker-Firm Matching," Working Papers, Lund University, Department of Economics 2012:3, Lund University, Department of Economics.
  3. Judith A. Frias & David S. Kaplan & Eric Verhoogen, 2012. "Exports and Within-Plant Wage Distributions: Evidence from Mexico," American Economic Review, American Economic Association, American Economic Association, vol. 102(3), pages 435-40, May.
  4. Kaplan, David S. & Lederman, Daniel & Robertson, Raymond, 2012. "What drives short-run labor market volatility in offshoring industries ? evidence from northern Mexico during 2007-2009," Policy Research Working Paper Series, The World Bank 6268, The World Bank.
  5. Gabriel J. Felbermayr & Andreas Hauptmann & Hans-Jörg Schmerer, 2012. "International Trade and Collective Bargaining Outcomes: Evidence from German Employer-Employee Data," Ifo Working Paper Series, Ifo Institute for Economic Research at the University of Munich Ifo Working Paper No. 130, Ifo Institute for Economic Research at the University of Munich.
  6. Gene Grossman, 2013. "Heterogeneous workers and international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 149(2), pages 211-245, June.
  7. Inga Heiland & Wilhelm Kohler, 2013. "Heterogeneous Workers, Trade, and Migration," CESifo Working Paper Series, CESifo Group Munich 4387, CESifo Group Munich.
  8. Krishna, Pravin & Poole, Jennifer P. & Senses, Mine Zeynep, 2014. "Wage Effects of Trade Reform with Endogenous Worker Mobility," Journal of International Economics, Elsevier, Elsevier, vol. 93(2), pages 239-252.
  9. Daniel Baumgarten, 2010. "Exporters and the Rise in Wage Inequality – Evidence from German Linked Employer-Employee Data," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0217, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  10. Ornelas, Emanuel, 2012. "Preferential trade agreements and the labour market," ILO Working Papers, International Labour Organization 469183, International Labour Organization.
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