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Globalization, the Jobs Ladder and Economic Mobility

Author

Listed:
  • Davidson, Carl

    () (Department of Economics)

  • Heyman, Fredrik

    () (Research Institute of Industrial Economics (IFN))

  • Matusz, Steven

    (Department of Economics)

  • Sjöholm, Fredrik

    () (Department of Economics, Lund University)

  • Chun Zhu, Susan

    (Department of Economics)

Abstract

Globalization affects the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and workers differ in skills, and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. We calibrate the model using many of the same parameters and targeting the same moments of the US economy as Melitz and Redding (2015) and then investigate the impact of globalization. Our results indicate that although falling trade costs results in greater wage inequality, it also leads to a wider path up the jobs ladder and less time spent in entry level jobs.

Suggested Citation

  • Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Chun Zhu, Susan, 2018. "Globalization, the Jobs Ladder and Economic Mobility," Working Paper Series 1249, Research Institute of Industrial Economics, revised 21 Feb 2020.
  • Handle: RePEc:hhs:iuiwop:1249
    as

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    References listed on IDEAS

    as
    1. John Haltiwanger & Henry Hyatt & Erika McEntarfer, 2015. "Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage," NBER Working Papers 21235, National Bureau of Economic Research, Inc.
    2. Farber, Henry S, 1994. "The Analysis of Interfirm Worker Mobility," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 554-593, October.
    3. Sampson, Thomas, 2014. "Selection into trade and wage inequality," LSE Research Online Documents on Economics 59287, London School of Economics and Political Science, LSE Library.
    4. Pawel Krolikowski, 2017. "Job Ladders and Earnings of Displaced Workers," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(2), pages 1-31, April.
    5. Lillard, Lee A, 1977. "Inequality: Earnings vs. Human Wealth," American Economic Review, American Economic Association, vol. 67(2), pages 42-53, March.
    6. Nezih Guner & Alessandro Ruggieri & James Tybout, 2018. "Training, Offshoring, and the Job Ladder," 2018 Meeting Papers 349, Society for Economic Dynamics.
    7. Henry S. Farber, 1998. "Are Lifetime Jobs Disappearing? Job Duration in the United States, 1973-1993," NBER Chapters, in: Labor Statistics Measurement Issues, pages 157-206, National Bureau of Economic Research, Inc.
    8. Erhan Artuç & Shubham Chaudhuri & John McLaren, 2010. "Trade Shocks and Labor Adjustment: A Structural Empirical Approach," American Economic Review, American Economic Association, vol. 100(3), pages 1008-1045, June.
    9. Mion, Giordano & Opromolla, Luca David & Sforza, Alessandro, 2016. "The Diffusion of Knowledge via Managers' Mobility," CEPR Discussion Papers 11706, C.E.P.R. Discussion Papers.
    10. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
    11. Henry S. Farber, 2010. "Job Loss and the Decline in Job Security in the United States," NBER Chapters, in: Labor in the New Economy, pages 223-262, National Bureau of Economic Research, Inc.
    12. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    13. Thomas Sampson, 2014. "Selection into Trade and Wage Inequality," American Economic Journal: Microeconomics, American Economic Association, vol. 6(3), pages 157-202, August.
    14. Mion, Giordano & Opromolla, Luca David & Sforza, Alessandro, 2016. "The Diffusion of Knowledge via Managers' Mobility," CEPR Discussion Papers 11706, C.E.P.R. Discussion Papers.
    15. Danielken Molina & Marc-Andreas Muendler, 2013. "Preparing to Export," NBER Working Papers 18962, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Job Ladders; Globalization; Wages; Inequality; Export;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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