Firm Heterogeneity and the Labor Market Effects of Trade Liberalization

30 Pages Posted: 29 Jan 2009

See all articles by Hartmut Egger

Hartmut Egger

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Udo Kreickemeier

University of Tuebingen; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

This article develops a model that incorporates workers' fair wage preferences into a general equilibrium framework with heterogeneous firms. In a setting where the wage considered to be fair by workers depends on the productivity of the firm they are working in, we study the determinants of profits, involuntary unemployment and within-group wage inequality. We use this model to investigate the effects of globalization, thereby pointing to distributional conflicts that have so far not been accounted for: a simultaneous increase of average profits and involuntary unemployment as well as a surge in within-group wage inequality.

Suggested Citation

Egger, Hartmut and Kreickemeier, Udo, Firm Heterogeneity and the Labor Market Effects of Trade Liberalization. International Economic Review, Vol. 50, Issue 1, pp. 187-216, February 2009. Available at SSRN: https://ssrn.com/abstract=1333889 or http://dx.doi.org/10.1111/j.1468-2354.2008.00527.x

Hartmut Egger (Contact Author)

University of Zurich - Department of Economics ( email )

Zürichbergstrasse 14
CH-8032 Zurich
Switzerland

HOME PAGE: http://www.wwi.unizh.ch/staff/egger/index.php

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Udo Kreickemeier

University of Tuebingen ( email )

DE-72074 Tubingen
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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