Multi-dimensional skills and matching: implications for international trade and wage inequality

Chihiro Inaba

Abstract


Workers have various kinds of skills and abilities in different amounts and proportions.The technology of firms in an industry is also characterized by a certain skill combination. The combinations of skills supplied by workers are often not the same as those demanded by firms---there can be mismatches between the skills supplied by workers and those demanded by firms. This kind of mismatches can cause both inter- and intra-industry wage inequalities.

 With two countries that have two industries and different skill distribution, international trade has a portion of the workers to move to a industry with a higher wage income than by remaining in the former industry. However, the moving workers who are matched with less appropriate firms may receive a lower wage income than in autarky.


Keywords


multi-dimensional skills; skill mismatch; international trade; income inequality

Full Text:

PDF

References


Adao, R. 2015, Worker heterogeneity, and worker inequality, and international trade: Theory and Evidence from Brazil, mimeo.

Bougheas, S. and R. Riezman, 2007, Trade, and the Distribution of Human Capital, Journal of International Economics 73: 421-433.

Burnstein, A., E. Morales, and J. Vogel, 2015, Accounting for changes in between-group inequality, NBER working paper 20855.

Costinot, A. and J. Vogel, 2010 Matching and inequality in the world economy, Journal of Political Economy 118: 747-786.

Egger, H. and U. Kreickemeier, 2009, Firm heterogeneity and the labor market effect of trade liberalization, International Economic Review 50: 187-216.

Egger, H. and U. Kreickemeier, 2012, Fairness, trade, and inequality, Journal of International Economics 86: 184-196.

Galle, S., A. Rodriguez-Clare, and M. Yi, 2017, Slicing the pie: Quantifying the aggregate and distributional effects of trade, it NBER Working Paper No. 23737.

Grinols, E. and S. Matusz, 1988, Some welfare implications of job mobility in general equilibrium, American Economic Review} 78: 261-266.

Grossman, G. and G. Maggi, 2000, Diversity and trade, American Economic Review, 90: 1255-1275.

Guvenen, F., B. Kuruscu, S. Tanaka, and D. Wisczer, 2017, Multidimensional skill mismatch, mimeo.

Felbermayr, G., J. Prat and H. Schmerer, 2011 Globalization and labor market outcomes: wage bargaining, search frictions, and firm heterogeneity, Journal of Economic Theory 146: 39-73.

Helpman, E., O. Itskhoki, and S. Redding, 2010, Inequality and unemployment in a global economy, Econometrica 78: 1239-1283.

Helpman, E., O. Itskhoki and S. Redding, 2010b, Unequal effects of trade on workers with different abilities, Journal of the European Economic Association, Paper and Proceedings 8: 456-466.

Lise, J. and F. Postel-Vinay, 2016, Multinational skills, sorting, and human capital accumulation, mimeo.

Ohnsorge, F. and D. Trefler, 2007, Sorting it out: International trade with heterogeneous workers, Journal of Political Economy 88: 868-892.

Rosen, S., 1978, Substitution and division of labor, Economica} 45: 235-250.

Roy, A., 1950, The distribution of earnings and individual output, The Economic Journal 60: 489-505.




DOI: http://dx.doi.org/10.5202/rei.v10i2.296



E-ISSN 2038 1379 -  2009-2022 University of Perugia