Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2012:3: Liberalized Trade and Worker-Firm Matching

Carl Davidson , Fredrik Heyman , Steven Matusz , Fredrik Sjöholm () and Susan Chun Zhu
Additional contact information
Carl Davidson: Michigan State University
Fredrik Heyman: The Research Institute of Industrial Economics, Sweden
Steven Matusz: Michigan State University
Fredrik Sjöholm: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Susan Chun Zhu: Michigan State University

Abstract: Recent theoretical analysis suggests that a reduction in the cost of exporting increases the degree of assortative matching between workers and firms in export-oriented industries. Changes that reduce the cost of imports have an ambiguous impact on matching. We combine detailed Swedish matched worker-firm data from 1995 – 2005 with tariff data to test these hypotheses. The data cover 94 sectors subject to international competition and includes all firms with at least 20 employees. Our findings strongly support the theoretical predictions.

Keywords: Matching; Globalization; Firms; Workers; Multinational Enterprises; International Trade

JEL-codes: F14; F16; J20

14 pages, January 30, 2012

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