Business Intelligence

Globalization And Imperfect Labor Market Sorting

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Executive Summary

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, the authors 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, they find no evidence that openness affects the degree of matching in import-competing industries.

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