Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84184
Authors: 
Heiland, Inga
Kohler, Wilhelm
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4387
Abstract: 
We argue that the narrative of variety-induced gains from trade in differentiated goods needs revision. If producing differentiated varieties of a good requires differentiated skills and if the work force is heterogeneous in these skills, then firms are likely to have monopsony power. We show that trade then has adverse labor market effects: It increases the monopsony power of firms and worsens the average quality of matches between firms and workers. We also show that international migration has the opposite beneficial effects. Our model can explain two-way migration among similar countries, a pattern that features prominently in migration data.
Subjects: 
two-way migration
gains from trade
heterogeneous workers
JEL: 
F12
F16
F22
J24
Document Type: 
Working Paper

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