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Labor Market Frictions, Firm Growth, and International Trade

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  • Pablo D. Fajgelbaum

Abstract

I study the aggregate effects of labor market frictions in a small open economy where firms grow slowly and make fixed export investments. The model features interactions between dynamic investments in exporting and search frictions with job-to-job mobility. A calibration to Argentina's economy matching data on firm growth, worker transitions between firms, and export dynamics suggests that the real income gains from lowering frictions in job-to-job transitions are about 7 times larger than comparable reductions in frictions from unemployment. Barriers to worker mobility across firms matter for the real income gains of trade-cost reductions.

Suggested Citation

  • Pablo D. Fajgelbaum, 2013. "Labor Market Frictions, Firm Growth, and International Trade," NBER Working Papers 19492, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19492
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    Cited by:

    1. repec:oup:jeurec:v:16:y:2018:i:5:p:1476-1539. is not listed on IDEAS
    2. Carrère, Céline & Grujovic, Anja & Robert-Nicoud, Frédéric, 2015. "Trade and frictional unemployment in the global economy," LSE Research Online Documents on Economics 66490, London School of Economics and Political Science, LSE Library.
    3. Gabriel Felbermayr & Giammario Impullitti & Julien Prat, 2018. "Firm Dynamics and Residual Inequality in Open Economies," Journal of the European Economic Association, European Economic Association, vol. 16(5), pages 1476-1539.
    4. A. Kerem Co?ar & Nezih Guner & James Tybout, 2016. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," American Economic Review, American Economic Association, vol. 106(3), pages 625-663, March.
    5. Dobbelaere, Sabien & Kiyota, Kozo, 2018. "Labor market imperfections, markups and productivity in multinationals and exporters," Labour Economics, Elsevier, vol. 53(C), pages 198-212.
    6. Sabien Dobbelaere & Mark Vancauteren, 2014. "Market imperfections, skills and total factor productivity : Firm-level evidence on Belgium and the Netherlands," Working Paper Research 267, National Bank of Belgium.
    7. Bombardini, Matilde & Orefice, Gianluca & Tito, Maria D., 2019. "Does exporting improve matching? Evidence from French employer-employee data," Journal of International Economics, Elsevier, vol. 117(C), pages 229-241.
    8. Almeida, Rita K. & Poole, Jennifer P., 2017. "Trade and labor reallocation with heterogeneous enforcement of labor regulations," Journal of Development Economics, Elsevier, vol. 126(C), pages 154-166.
    9. Christian Holzner & Mario Larch, 2011. "Capacity Constraining Labor Market Frictions in a Global Economy," CESifo Working Paper Series 3597, CESifo Group Munich.
    10. Gabriel Felbermayr & Gilbert Spiegel, 2014. "A Simple Theory of Trade, Finance and Firm Dynamics," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 253-274, May.
    11. Gabriel Felbermayr & Gilbert Spiegel, 2014. "A Simple Theory of Trade, Finance and Firm Dynamics," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 253-274, May.
    12. Elhanan Helpman & Oleg Itskhoki, "undated". "Trade Liberalization and Labor Market Dynamics with Heterogeneous Firms," Working Paper 199161, Harvard University OpenScholar.

    More about this item

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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