Firm dynamics, job turnover, and wage distributions in an open economy

A. Kerem Cosar, Nezih Guner, James Tybout

Research output: Contribution to journalArticleResearchpeer-review

40 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)625-663
JournalAmerican Economic Review
Volume106
Issue number3
DOIs
Publication statusPublished - 1 Mar 2016

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