Matching and Sorting in a Global Economy

Elhanan Helpman, Gene Grossman and Philipp Kircher

No 9680, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and "managers", each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates.

Keywords: Heterogeneous labor; Matching; Sorting; Productivity; Wage distribution; International trade (search for similar items in EconPapers)
JEL-codes: F11 F16 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Matching and Sorting in a Global Economy (2013)
Working Paper: Matching and Sorting in a Global Economy (2013)
Working Paper: Matching and Sorting in a Global Economy (2013)
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