Working Paper No. 856

Globalization and Imperfect Labor Market Sorting

Published: December 30, 2010, revised August 2011, April 2012 and July 2014Pages: 47Keywords: Matching; Firms; Workers; Globalization; SwedenJEL-codes: F14; F16; J20
Published version

Globalization and Imperfect Labor Market Sorting Carl Davidson, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chun Zhu


This paper focuses on the ability of the labor market to correctly match heterogeneous workers to jobs within a given industry and the role that globalization plays in that process. Using matched worker-firm data from Sweden, we find strong evidence that openness improves the matching between workers and firms in export-oriented industries. This suggests that there may be significant gains from globalization that have not been identified in the past – globalization may improve the efficiency of the matching process in the labor market. On the other hand, we find no evidence that openness affects the degree of matching in import-competing industries. These results remain unchanged after adding controls for technical change at the industry level or measures of domestic anti-competitive regulations and product market competition. In addition, we find no evidence that technical change has any impact on the degree of matching at the industry level. Our results are also robust to alternative measures of the degree of matching, openness, or the trade status of an industry.

Fredrik Heyman

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Ph: +46 8 665 4537
fredrik.heyman@ifn.se

Fredrik Sjöholm

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Ph: +46 46 222 74 26
fredrik.sjoholm@nek.l...

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