Topic Archive: Labor Economics

The culture of effort and the US-EU divide in labour market and firm-level outcomes

Barcelona GSE research on by Alessandra Bonfiglioli and Gino Gancia

Differences in labour market and firm statistics between the US and Europe are easy to dismiss as cultural. This column applies an equilibrium model of worker screening and effort to cross-country data, showing that a large chunk of observed differences can be explained by the strategic interaction between firm and worker strategies. Evidence suggests that the US is in a high-screening, high-effort equilibrium, while southern Europe is in the complementary equilibrium. Perhaps culture is more economic than we might assume.

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Globalisation, job security, and wages

Barcelona GSE research on by Kerem Cosar, Nezih Guner, and James R. Tybout

Trade liberalisations are often accompanied by labour market reforms, making it difficult to isolate their effects. This column discusses the effects of trade liberalisation, globalisation, and labour-market reforms on the Colombian labour market. Reduced trade frictions increased cross-firm wage inequality and shifted the firm-size distribution rightward, with offsetting effects on overall wage inequality. Average income increased, but the gains were concentrated among employees of large, productive firms with access to export markets. Greater trade openness also increased job turnover.

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