Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/182527
Authors: 
Mertens, Matthias
Year of Publication: 
2018
Series/Report no.: 
IWH Discussion Papers 18/2018
Abstract: 
This article examines how trade shocks shape labour market imperfections that create market power in labour markets and prevent an efficient allocation of labour. I develop a framework for measuring such labour market distortions in monetary terms and document large degrees of those distortions in Germany's manufacturing sector. Import competition can only exert labour market disciplining effects when firms rather than workers have labour market power. Otherwise, export demand and import competition shocks tend to fortify existing distortions by amplifying labour market power structures. This diminishes the gains from trade compared to a model with perfectly competitive labour markets.
Subjects: 
international trade
market power
labour markets
allocative efficiency
JEL: 
D24
F14
F16
J50
L13
L60
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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