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Globalization and Imperfect Labor Market Sorting

  • Davidson, Carl

    (Michigan State University)

  • Heyman, Fredrik

    (The Research Institute of Industrial Economics)

  • Matusz, Steven

    (Michigan State University)

  • Sjöholm, Fredrik

    ()

    (Department of Economics, Lund University)

  • Zhu, Susan Chun

    (Michigan State University)

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 industries with greater comparative advantage. 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. 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. 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 Lund University, Department of Economics in its series Working Papers with number 2011:25.

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Length: 49 pages
Date of creation: 15 Jul 2011
Date of revision:
Handle: RePEc:hhs:lunewp:2011_025
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Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden

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