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Trade Competition, Technology and Labor Re-allocation

Author

Listed:
  • Bahar Baziki, Selva

    () (Central Bank of the Republic of Turkey)

  • Ginja, Rita

    () (Uppsala Center for Labor Studies)

  • Borota Milicevic, Teodora

    () (Uppsala Center for Labor Studies)

Abstract

This paper studies the changes in labor allocation across firms and industries in response to changes in technology (captured by the adoption of information and communication technologies, ICT) and import competition, due to increased exposure to trade competition from China. We use detailed matched worker-firm data from the Swedish manufacturing sector. We provide new evidence on the mobility of heterogeneous workers across firms and document increased assortative matching of workers in ICT intensive industries. However, the sorting patterns are not uniform across industries within this group. The adoption of ICT along with stronger Chinese import competition results in a significant skill upgrade within high-wage firms. Incontrast,intheabsence of strong pressures in importcompetition, sorting occurs at the low end of the worker-firm distribution, i.e. low-skill workers allocate to low-wage firms. Industries with low ICT intensity do not exhibit any of these sorting patterns. We rationalize our empirical findings through a labor market matching model which is able to explain the increased assortative matching in ICT intensive industries through an increase in the relative demand for qualified workers.

Suggested Citation

  • Bahar Baziki, Selva & Ginja, Rita & Borota Milicevic, Teodora, 2015. "Trade Competition, Technology and Labor Re-allocation," Working Paper Series, Center for Labor Studies 2016:1, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uulswp:2016_001
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    References listed on IDEAS

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    Cited by:

    1. Spencer Bastani & Tomer Blumkin & Luca Micheletto, 2016. "Anti-discrimination Legislation and the Efficiency-Enhancing Role of Mandatory Parental Leave," Working Papers 088, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    2. Kumar, Anil & Liang, Che-Yuan, 2016. "Estimating Taxable Income Responses with Elasticity Heterogeneity," Working Papers 1611, Federal Reserve Bank of Dallas, revised 02 Mar 2018.
    3. Ando, Michihito & Dahlberg, Matz & Engström, Gustav, 2017. "The risks of nuclear disaster and its impact on housing prices," Economics Letters, Elsevier, vol. 154(C), pages 13-16.
    4. Borrs, Linda & Knauth, Florian, 2016. "The impact of trade and technology on wage components," DICE Discussion Papers 241, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. Laun, Tobias & Wallenius, Johanna, 2017. "Having It All? Employment, Earnings and Children," Working Paper Series 2017:6, Uppsala University, Department of Economics.
    6. Edoardo Di Porto & Henry Ohlsson, 2016. "Avoiding Taxes by Transfers Within the Family," CSEF Working Papers 436, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

    More about this item

    Keywords

    Wage Inequality; Employment Dynamics; Assortative Matching; Import Competition; Technological Change;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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