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Worker-firm matching in a global economy

University of British Columbia

This thesis investigates the impact of international trade on the sorting patterns of workers across firms and analyzes the implications for welfare. The first essay builds a model of matching between heterogeneous workers and firms in presence of search frictions. Variation in the worker type at the firm level exists in equilibrium only because of search costs. When firms gain access to foreign markets their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence exporting firms select sets of workers that are less dispersed relative to the average. The second essay documents the difference in the sorting patterns of workers between exporters and non-exporters in a French matched employer-employee dataset. We proxy the type of each worker using her average wage over her job spells and construct measures of the average type and type dispersion at the firm level. We find that exporting firms tolerate a lower dispersion in the pool of workers they hire. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariffs. We also confirm the conjecture in the literature that exporters pay higher wages because, among other factors, they employ better workers. The final chapter explores the implications for wage inequality using the French Employer-Employee Data. We find that the differences in sorting in large part account for the existing differences in the wage structure between exporters and non-exporters. Exporting firms tend to have higher wages but tolerate a lower dispersion. Using an alternative theory-based measure of residual wage inequality, we also find that the unexplained component tends to be smaller in exporting and more productive firms, even when controlling for some differences in workforce composition. This finding suggests that exporters are better able to overcome frictions in the labour market in order to move closer to their ideal worker.

Text

2015-07-27

Attribution-NonCommercial-NoDerivs 2.5 Canada

http://hdl.handle.net/2429/54172

Economics

University of British Columbia

UBCV

http://creativecommons.org/licenses/by-nc-nd/2.5/ca/