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Trade and the Firm-Internal Allocation of Workers to Tasks


  • Hartmut Egger
  • Michael Koch


This paper looks inside the firm and investigates how trade alters the matching of worker-specific abilities and task-specific skill requirements. The outcome of this matching depends on how firms organize their recruitment process and how much they invest into the screening of applicants. In the open economy, the most productive firms start exporting. They increase their market share and therefore find it attractive to increase their screening investment, which improves the matching outcome. Things are different for non-exporters, whose market share shrinks in the open economy, lowering their incentives to invest for screening applicants. Due to this asymmetric response, access to trade raises the dispersion of labor productivity between heterogeneous producers, while at the same time increasing the average quality of worker-task matches and thus economy-wide labor productivity. The productivity-enhancing effect of endogenous adjustments in the firm-internal allocation of workers to tasks points to a so far unexplored channel through which gains from trade can materialize.

Suggested Citation

  • Hartmut Egger & Michael Koch, 2013. "Trade and the Firm-Internal Allocation of Workers to Tasks," Working Papers 139, Bavarian Graduate Program in Economics (BGPE).
  • Handle: RePEc:bav:wpaper:139_eggerkoch

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    References listed on IDEAS

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    More about this item


    International Trade; Firm-Internal Labor Markets; Heterogeneity;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production


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