Trade and the Firm-Internal Allocation of Workers to Tasks

Michael Koch and Hartmut Egger ()

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: This paper looks inside the firm and investigates how trade alters the matching of worker-specific abilities and task-specific requirements. The outcome of this matching depends on how firms organize their recruitment process and how much they invest into the screening of applicants. In the open economy, the most productive firms start exporting. They increase their market share and therefore find it attractive to increase their screening investment, which improves the matching outcome. Things are different for non-exporters, whose market share shrinks in the open economy, lowering their incentive to invest to screen applicants. Due to this asymmetric response, access to trade raises the dispersion of labor productivity between heterogeneous producers, while at the same time increasing the average quality of worker-task matches and thus economy-wide labor productivity. The productivity-enhancing effect of endogenous adjustments in the firm-internal allocation of workers to tasks points to a so far unexplored channel through which gains from trade can materialize.

JEL-codes: F12 F16 L23 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Trade and the Firm-Internal Allocation of Workers to Tasks (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79841

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