Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185553
Authors: 
Heiland, Inga
Kohler, Wilhelm
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7355
Abstract: 
We develop a model that combines monopolistic competition on goods markets with skill-type heterogeneity on the labor market to analyze the effects of trade and migration on welfare and inequality. Skill-type heterogeneity and partial specificity to firms’ endogenously chosen skill requirements lead to endogenous worker-firm match quality, endogenous wage markups, and within-firm wage inequality. We identify novel effects of trade and migration. Trade enhances firms’ monopsony power on the labor market and worsens the average quality of worker-firm matches, but the gains from trade theorem survives. Integration of labor markets leads to two-way migration between symmetric countries. Migration enhances competitiveness on the labor market and tends to increase the average quality of worker-firm matches. Trade and migration are complements. Our model clearly advocates opening up labor markets simultaneously with trade liberalization.
Subjects: 
two-way migration
gains from trade
heterogeneous workers
JEL: 
F12
F16
F22
J24
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.