Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191613
Authors: 
Mertens, Matthias
Year of Publication: 
2019
Series/Report no.: 
IWH-CompNet Discussion Papers 2/2019
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 labor market distortions in monetary terms and document large degrees of those distortions in Germany's manufacturing sector. Import competition can only exert labor 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
labor markets
allocative efficiency
JEL: 
D24
F14
F16
J50
L13
L60
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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