Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80809
Authors: 
Egger, Hartmut
Koch, Michael
Year of Publication: 
2013
Series/Report no.: 
BGPE Discussion Paper 139
Abstract: 
This paper looks inside the firm and investigates how trade alters the matching of worker-specific abilities and task-specific skill 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 incentives to invest for screening 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.
Subjects: 
International Trade
Firm-Internal Labor Markets
Heterogeneity
JEL: 
F12
F16
L23
Document Type: 
Working Paper

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