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Globalization and the Jobs Ladder

Carl Davidson (), Steven Matusz (), Susan Chun Zhu (), Fredrik Heyman () and Fredrik Sjöholm ()
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Carl Davidson: Michigan State University, Department of Economics, Postal: Department of Economics, Michigan State University, 110 Marshall-Adams Hall, 486 W. Circle Dr., East Lansing, MI 48824

No 2018-8, Working Papers from Michigan State University, Department of Economics

Abstract: Globalization might affect the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and skills and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. There are two types of skills that determine a worker’s productivity in the model: the ability to work with the appropriate technology and the ability to facilitate international commerce. Workers imperfectly acquire these skills on the job. Firms cannot costlessly observe the skills embodied in a worker but can observe each potential recruit’s employment history. In equilibrium, firms self-select into groups that use different networks to fill vacancies. Our results indicate that although falling trade costs may result in greater wage inequality, if trade costs are initially high, it can also lead to a wider path up the jobs ladders and less time spent in entry level jobs. The key assumptions and predictions are confirmed in data on recruitments and job mobility in Sweden.

Keywords: Job Ladders; Globalization; Wages; Inequality; Export (search for similar items in EconPapers)
JEL-codes: F10 F20 J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2018-10-01
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Working Paper: Globalization and the Jobs Ladder (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ris:msuecw:2018_008

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