This paper focuses on the ability of the labor market to efﬁciently 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 industries with greater comparative advantage. 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. 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. Our results are also robust to alternative measures of the degree of matching, openness, and the trade status of an industry.
Journal of International Economics
Globalization and Imperfect Labor Market Sorting