Heterogeneous Workers, Trade, and Migration

Arbeitspapier

We argue that the narrative of variety-induced gains from trade in differentiated goods needs revision. If producing differentiated varieties of a good requires differentiated skills and if the work force is heterogeneous in these skills, then firms are likely to have monopsony power. We show that trade then has adverse labor market effects: It increases the monopsony power of firms and worsens the average quality of matches between firms and workers. We also show that international migration has the opposite beneficial effects. Our model can explain two-way migration among similar countries, a pattern that features prominently in migration data.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4387

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Trade and Labor Market Interactions ; International Migration ; Human Capital; Skills; Occupational Choice; Labor Productivity
• Subject: two-way migration ; gains from trade ; heterogeneous workers

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heiland, Inga ; Kohler, Wilhelm
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/84184
• Last update: 10.03.2025, 11:43 AM CET