Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy
A. Kerem Coşar, Nezih Guner, James Tybout
American Economic Review · 2016 · Volume 106 · Issue 3
Abstract
This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows and wages. Counterfactual experiments imply that Colombia's integration with global product markets increased its national income at the expense of higher unemployment, greater wage inequality, and increased firm-level volatility. In contrast, contemporaneous labor market reforms dampened the increase in unemployment and aggregate job turnover. The results speak more generally to the effects of globalization on labor markets. (JEL F13, F16, F66, J31, J63, O15, O19)
Keywords
Trade Policy, International Trade Organizations, Trade and Labor Market Interactions, Economic Impacts of Globalization: Labor, Wage Level and Structure, Wage Differentials, Labor Turnover, Vacancies, Layoffs, Economic Development: Human Resources, Human Development, Income Distribution, Migration, International Linkages to Development, Role of International Organizations
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