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

53 Pages Posted: 14 Nov 2013

See all articles by Kerem Cosar

Kerem Cosar

Stockholm School of Economics - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Bogazici University - Center for Economics and Econometrics

Nezih Guner

ICREA-MOVE; Autonomous University of Barcelona; Barcelona Graduate School of Economics (Barcelona GSE)

James Tybout

Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: November 2013

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 in a new way. The fitted model captures key features of Colombian firm dynamics and labor market outcomes, as well changes in these features during the past 25 years. Counterfactual experiments imply that integration with global product markets has increased both average income and job turnover in Colombia. In contrast, the experiments find little role for this country's labor market reforms in driving these variables. The results speak more generally to the effects of globalization on labor markets in Latin America and elsewhere.

Keywords: firm dynamics, inequality, International trade, labor market frictions, size distribution

JEL Classification: E24, F12, F16, J64, L11

Suggested Citation

Cosar, A. Kerem and Guner, Nezih and Tybout, James R., Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy (November 2013). CEPR Discussion Paper No. DP9732, Available at SSRN: https://ssrn.com/abstract=2353889

A. Kerem Cosar (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden

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

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Bogazici University - Center for Economics and Econometrics ( email )

Bogazici Universitesi
Bebek
Istanbul, 34342
Turkey

Nezih Guner

ICREA-MOVE ( email )

Campus de Bellaterra-UAB Edifici B (s/n)
EDIFICI B
Cerdanyola del Vallès
, Barcelona 08193
Spain

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

James R. Tybout

Pennsylvania State University - Department of Economics ( email )

517 Kern Graduate Building
University Park, PA 16802-3306
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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