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Division of Labor in the Global Economy

Author

Listed:
  • Sascha O. Becker
  • Hartmut Egger
  • Michael Koch
  • Marc-Andreas Muendler

Abstract

This paper links globalization, worker efficiency, and wage inequality within plants to internal labor market organization. Using German plant–worker data and information on the task content of occupations, we document that larger plants (i) use more occupations, (ii) assign fewer tasks per occupation, and (iii) exhibit greater wage dispersion. We develop a model where plants endogenously bundle tasks into occupations, improving worker-task matching at the cost of higher fixed span-of-control costs. Embedding this into a Melitz framework, we show that trade increases worker efficiency and wage inequality in exporting plants, whereas non-exporting plants experience the opposite effects. Structural estimation and simulations confirm the model’s predictions and point to non-monotonic economy-wide effects.

Suggested Citation

  • Sascha O. Becker & Hartmut Egger & Michael Koch & Marc-Andreas Muendler, 2025. "Division of Labor in the Global Economy," CESifo Working Paper Series 12284, CESifo.
    • Handle: RePEc:ces:ceswps:_12284
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    References listed on IDEAS

    as
    1. Stüber, Heiko & Dauth, Wolfgang & Eppelsheimer, Johann, 2023. "A guide to preparing the sample of integrated labour market biographies (SIAB, version 7519 v1) for scientific analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 57, pages 1-7.
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    Keywords

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    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
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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