Current working Papers
How International Experience Helps Shape Labor Market Outcomes
(This paper is joint with Fredrik Heyman, Steven Matusz, Fredrik Sjoholm and Susan Zhu)
Abstract: This paper examines how experience from working in a foreign owned firm affects worker mobility.
International experience can provide a worker with knowledge about foreign operations, thereby
making them more attractive to other employers who are also engaged in international businesses.
We follow workers in local Swedish firms where some experience an internationalization shock when
their firm is acquired by a foreign multinational firm. Matching acquired firms with a group of
similar control firms and applying a stacked difference-in-differences estimation approach, we find
that international experience increases the likelihood of job switching to a multinational firm by
around 4 percentage points and decreases the likelihood of job switching to a local firm by around 5
percentage points. Moreover, the post-acquisition wage growth rate is 10 percentage points higher
for workers moving to MNEs as compared to stayers at acquired firms, leading to a steeper wage
growth trajectory for movers to MNEs.
(This paper is joint with Fredrik Heyman, Steven Matusz, Fredrik Sjoholm and Susan Zhu)
Abstract: This paper examines how experience from working in a foreign owned firm affects worker mobility.
International experience can provide a worker with knowledge about foreign operations, thereby
making them more attractive to other employers who are also engaged in international businesses.
We follow workers in local Swedish firms where some experience an internationalization shock when
their firm is acquired by a foreign multinational firm. Matching acquired firms with a group of
similar control firms and applying a stacked difference-in-differences estimation approach, we find
that international experience increases the likelihood of job switching to a multinational firm by
around 4 percentage points and decreases the likelihood of job switching to a local firm by around 5
percentage points. Moreover, the post-acquisition wage growth rate is 10 percentage points higher
for workers moving to MNEs as compared to stayers at acquired firms, leading to a steeper wage
growth trajectory for movers to MNEs.
How International Experience Helps Shape Labor Market Outcomes | |
File Size: | 1254 kb |
File Type: |
Networks, Ladder and Education: Labor Market Strategies in The Presence of Globalization
(This paper is joint with Fredrik Heyman, Steven Matusz, Fredrik Sjoholm, and Susan Zhu)
Abstract: We develop a model in which firms differ in terms of productivity ala Melitz (2003) and workers differ in terms of the skills that they possess. There are two types of skills that determine a worker’s productivity – the ability to work with the appropriate technology, which we call “basic experience,” and the ability to facilitate international commerce, which we refer to as “international experience.” Workers can imperfectly acquire these skills on the job or through schooling. Firms cannot observe the skills embodied in a worker, but can observe each potential recruit’s employment history and education level. In equilibrium, firm self-select into groups that use different networks to fill vacancies. Some firms hire young, uneducated, inexperienced workers and pay a low wage; some firms poach workers with either basic experience or international experience from other firms by offering a higher wage; and other firms hire only educated workers. The heterogeneity in firm productivity implies that firms will also differ in their level of international engagement. We use the model to examine how globalization alters the firms’ choices of hiring networks, workers’ decisions about schooling and skill acquisition and how these changes influence the manner in which the gains from globalization are distributed.
(This paper is joint with Fredrik Heyman, Steven Matusz, Fredrik Sjoholm, and Susan Zhu)
Abstract: We develop a model in which firms differ in terms of productivity ala Melitz (2003) and workers differ in terms of the skills that they possess. There are two types of skills that determine a worker’s productivity – the ability to work with the appropriate technology, which we call “basic experience,” and the ability to facilitate international commerce, which we refer to as “international experience.” Workers can imperfectly acquire these skills on the job or through schooling. Firms cannot observe the skills embodied in a worker, but can observe each potential recruit’s employment history and education level. In equilibrium, firm self-select into groups that use different networks to fill vacancies. Some firms hire young, uneducated, inexperienced workers and pay a low wage; some firms poach workers with either basic experience or international experience from other firms by offering a higher wage; and other firms hire only educated workers. The heterogeneity in firm productivity implies that firms will also differ in their level of international engagement. We use the model to examine how globalization alters the firms’ choices of hiring networks, workers’ decisions about schooling and skill acquisition and how these changes influence the manner in which the gains from globalization are distributed.
Labor Market Structure and Offshoring | |
File Size: | 668 kb |
File Type: |
Pigou, Becker, and the Regulation of Punishment-Proof Firms
(This paper is joint with Larry Martin and Jay Wilson)
Abstract: We study the use of fines and inspections to control production activities that create external damages. The model contains a continuum of firms, differing in their compliance costs, so that only high-cost firms evade the regulations. If fines are low, then Pigouvian rules for taxing externalities apply, modified to account for costly inspections. According to Becker’s classic work on crime and punishment, however, these inspection costs can be minimized by raising the fines to very high levels. But by bankrupting firms, high fines are shown to increase the external costs generated by a non-compliant firm’s production activities, although they reduce the number of firms that fail to comply with the regulation. We analyze this tradeoff in detail, and obtain some unexpected results about how it should be resolved.
(This paper is joint with Larry Martin and Jay Wilson)
Abstract: We study the use of fines and inspections to control production activities that create external damages. The model contains a continuum of firms, differing in their compliance costs, so that only high-cost firms evade the regulations. If fines are low, then Pigouvian rules for taxing externalities apply, modified to account for costly inspections. According to Becker’s classic work on crime and punishment, however, these inspection costs can be minimized by raising the fines to very high levels. But by bankrupting firms, high fines are shown to increase the external costs generated by a non-compliant firm’s production activities, although they reduce the number of firms that fail to comply with the regulation. We analyze this tradeoff in detail, and obtain some unexpected results about how it should be resolved.
Pigou, Becker, and the Regulation of Punishment-Proof Firms | |
File Size: | 426 kb |
File Type: |
The Optimal Fine for Risk Neutral Offenders: A New Approach to the Becker Conundrum
(Joint paper with Larry Martin and Jay Wilson)
Abstract: Gary Becker’s classic 1968 paper demonstrates that fines dominate expenditures on detection as a means of controlling illegal activities, because fines represent socially-costless transfers of income. As a result, fines should be set at their maximal levels. Subsequent research has produced several exceptions to this rule, but they involve significant departures from Becker’s framework. We use a model that is consistent with this framework (risk-neutral agents and only one type and level of “crime”) to demonstrate that it may be optimal to set fines below their maximal levels. The novel feature of our model is that sufficiently high fines interfere with prior commitments made by offenders to compensate other private agents (e.g., debt). In some cases, fines should be low enough to leave offenders with positive assets after honoring all such commitments.
(Joint paper with Larry Martin and Jay Wilson)
Abstract: Gary Becker’s classic 1968 paper demonstrates that fines dominate expenditures on detection as a means of controlling illegal activities, because fines represent socially-costless transfers of income. As a result, fines should be set at their maximal levels. Subsequent research has produced several exceptions to this rule, but they involve significant departures from Becker’s framework. We use a model that is consistent with this framework (risk-neutral agents and only one type and level of “crime”) to demonstrate that it may be optimal to set fines below their maximal levels. The novel feature of our model is that sufficiently high fines interfere with prior commitments made by offenders to compensate other private agents (e.g., debt). In some cases, fines should be low enough to leave offenders with positive assets after honoring all such commitments.
The Optimal Fine for Risk Neutral Offenders: A New Approach to the Becker Conundrum | |
File Size: | 234 kb |
File Type: |