Division of Labor in the Global Economy

Sascha O. Becker, Hartmut Egger, Michael Koch and Marc-Andreas Muendler

No 12284, CESifo Working Paper Series from CESifo

Abstract: This paper links globalization, worker efficiency, and wage inequality within plants to internal labor market organization. Using German plant–worker data and information on the task content of occupations, we document that larger plants (i) use more occupations, (ii) assign fewer tasks per occupation, and (iii) exhibit greater wage dispersion. We develop a model where plants endogenously bundle tasks into occupations, improving worker-task matching at the cost of higher fixed span-of-control costs. Embedding this into a Melitz framework, we show that trade increases worker efficiency and wage inequality in exporting plants, whereas non-exporting plants experience the opposite effects. Structural estimation and simulations confirm the model’s predictions and point to non-monotonic economy-wide effects.

Keywords: tasks; specialization; international trade; firm-internal labor allocation (search for similar items in EconPapers)
JEL-codes: F12 F16 J3 L23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12284

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