Scandinavian Working Papers in Economics
Working Paper Series,
Research Institute of Industrial Economics
No 1249: Globalization, the Jobs Ladder and Economic Mobility
Carl Davidson (), Fredrik Heyman (), Steven Matusz, Fredrik Sjöholm () and Susan Chun Zhu
Additional contact information
Carl Davidson: Department of Economics, Postal: Michigan State University, East Lansing
Fredrik Heyman: Research Institute of Industrial Economics (IFN), Postal: and Department of Economics, Lund University
Steven Matusz: Department of Economics, Postal: Michigan State University, East Lansing
Fredrik Sjöholm: Department of Economics, Lund University, Postal: and Research Institute of Industrial Economics, Stockholm, Sweden
Susan Chun Zhu: Department of Economics, Postal: Michigan State University, East Lansing
Abstract: Globalization affects the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and workers differ in skills, and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. We calibrate the model using many of the same parameters and targeting the same moments of the US economy as Melitz and Redding (2015) and then investigate the impact of globalization. Our results indicate that although falling trade costs results in greater wage inequality, it also leads to a wider path up the jobs ladder and less time spent in entry level jobs.
Keywords: Job Ladders; Globalization; Wages; Inequality; Export
Language: English
44 pages, First version: November 19, 2018. Revised: February 21, 2020. Earlier revisions: August 8, 2019.
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