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American Economic Review Vol. 106 No. 3 2016

Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy

A. Kerem Coşar1; Nezih Guner2; James Tybout3

1 Stockholm School of Economics, Sveavägen 65, 113 83 Stockholm, Sweden, and CEPR (e-mail: ) · 2 ICREA-MOVE, Universitat Autonòma de Barcelona, Edifici B, Campus de Bellaterra, Facultat d'Economia, 08193 Bellaterra, Spain, and Barcelona GSE (e-mail: ) · 3 Economics Department, Pennsylvania State University, 517 Kern Graduate Building, University Park, PA 16802, and NBER (e-mail: )

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.

DOI
10.1257/aer.20110457
Volume
106
Issue
3
Pages
625-663
Language
en
Sources
crossref openalex bibtex:phds-export.bib

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