 Worker‐specific Effects of GlobalisationHartmut Egger () and Udo Kreickemeier The World Economy, 2010, vol. 33, issue 8, 987-1005 Abstract: This paper sets up a general equilibrium model, in which firms are heterogeneous due to productivity differences and workers have fairness preferences and hence provide full effort only if their factor return is sufficiently high. With the wage considered to be fair by workers depending on the operating profits of the firm in which they are employed, more productive firms in this setting are not only larger and make higher profits but they also have to pay higher wages due to rent‐sharing. This mechanism leads to wage differentiation even if all workers share the same individual characteristics. We use this framework to study worker‐specific effects of trade between two symmetric countries. Exporters in this setting make higher operating profits and hence have to pay higher wages than non‐exporters. This exporter wage premium provides a source for losses from trade and, all other things equal, makes a negative employment effect of trade more likely. Furthermore, it contributes significantly to a general increase in intra‐group income inequality among production workers when a country moves from autarky to trade. Date: 2010 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:33:y:2010:i:8:p:987-1005 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.