Carl Davidson (), Fredrik Heyman (), Steven Matusz (), Fredrik Sjöholm () and Susan Chun Zhu ()
Carl Davidson: Department of Economics, Michigan State University
Fredrik Heyman: Research Institute of Industrial Economics, Stockholm
Steven Matusz: Department of Economics, 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: Department of Economics, Michigan State University
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.
45 pages, First version: November 12, 2018. Revised: February 25, 2020.
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