Steven Matusz - Academia.edu (original) (raw)

Papers by Steven Matusz

Globalization might affect the mix of jobs available in an economy and the rate at which workers ... more Globalization might affect the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and skills and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. There are two types of skills that determine a worker’s productivity in the model: the ability to work with the appropriate technology and the ability to facilitate international commerce. Workers imperfectly acquire these skills on the job. Firms cannot costlessly observe the skills embodied in a worker but can observe each potential recruit’s employment history. In equilibrium, firms self-select into groups that use different networks to fill vacancies. Our results indicate that although falling trade costs may result in greater wage inequality, if trade costs are initially high, it can also lead to a wider path up the jobs ladders and less time spent in entr...

European Economic Review, 2020

Globalization affects the mix of jobs available in an economy and the rate at which workers gain ... more Globalization affects the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and workers differ in skills, and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. We calibrate the model using many of the same parameters and targeting the same moments of the US economy as Melitz and Redding (2015) and then investigate the impact of globalization. Our results indicate that although falling trade costs results in greater wage inequality, it also leads to a wider path up the jobs ladder and less time spent in entry level jobs.

Review of International Economics, 2016

The Review of Economic Studies, 1994

In dynamic models of unemployment in which the employed consume more than the unemployed, workers... more In dynamic models of unemployment in which the employed consume more than the unemployed, workers are finitely lived, and jobs are lasting, employment transfers consumption from future generations to those currently alive, resulting in a social surplus. That is, these transfers allow the current generation to consume more than its share of the output produced during its lifetime without the

SSRN Electronic Journal, 2014

Engagement in foreign markets can have an impact on firm organization and on the type of occupati... more Engagement in foreign markets can have an impact on firm organization and on the type of occupations that a firm needs. We examine the effect of globalization on the occupational mix using detailed Swedish data that cover all firms and a representative sample of the labor force for 1997-2005. We find a robust relationship between a firm's degree of international integration and its occupational mix. Multinationals, which are the most globally engaged firms, have a distribution of occupations skewed toward the more skilled. Non-multinational exporters have a distribution of occupations less skewed toward skilled compared to multinationals, but more skewed toward skilled occupations compared to Swedish non-exporters (which are the least globally engaged). Moreover, firms tend to have an even more skill intensive distribution of occupations when they mainly export to far away markets, or when they export differentiated goods. Our results are little changed (1) when we control for firm size, productivity, capital intensity, and firm age, (2) when we control for offshoring and R&D expenditures; (3) when we use alternative methods to rank occupations, or (4) when we conduct alternative robustness tests. In addition, the results are very similar for manufacturing and nonmanufacturing, and for foreign and Swedish multinationals. We interpret our results using a decomposition motivated by recent theoretical models of selection into exporting and FDI.

International Trade with Equilibrium Unemployment, 2009

International Trade with Equilibrium Unemployment, 2009

International Trade with Equilibrium Unemployment, 2009

Policy Research Working Papers, 1999

International Trade with Equilibrium Unemployment, 2009

Journal of International Economics, 2014

This paper focuses on the ability of the labor market to efficiently match heterogeneous workers ... more 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.

The Quarterly Journal of Economics, 1985

In a world with multiplicative production uncertainty and implicit labor contracts, we show that ... more In a world with multiplicative production uncertainty and implicit labor contracts, we show that the Rybczynski theorem retains its validity; therefore the quantity version of the Heckscher-Ohlin theorem survives as well. We also show that the Stolper-Samuelson theorem may not hold. A small increase in the price of the capital-intensive good may benefit labor. We derive a strong version of the factor price equalization theorem that shows free trade tends to equalize sector-specific unemployment rates and sector-specific factor prices across countries. Finally, we relate trade patterns to international differences in the degree of risk aversion.

The Economic Journal, 1986

... This situation has changed with * I have benefited from discussions with Wilfred Ethier, Cost... more ... This situation has changed with * I have benefited from discussions with Wilfred Ethier, Costas Azariadis, Joshua Aizenman, Beth Allen, Russell Cooper, Paulo Couthino, Jacques Cremer, Carl Davidson, Matthew Gelfand, Claudia Goldin, Jamie Marquez, John Pomery, Selig ...

The Economic Journal, 1987

The purpose of this paper is to present and analyse a simple two sector general equilibrium model... more The purpose of this paper is to present and analyse a simple two sector general equilibrium model which incorporates some of the real world frictions that keep factor markets from functioning perfectly. In particular, we investigate the performance of the economy when ...

Review of International Economics, 2006

It is often argued that international trade is all about long-run relationships. In this paper, w... more It is often argued that international trade is all about long-run relationships. In this paper, we argue that this view is flawed when factor markets are characterized by turnover. Toward that end, we provide a simple dynamic model of trade with labor market turnover and show that the relationship between the economy's short-run and long-run behavior is more complex than in traditional trade models. For example, in the short run, the economy may produce outside of its long-run frontier. We show that focusing on long-run relationships can lead one to draw faulty policy conclusions, while focusing on its short-run behavior restores sanity. The implication is that in the presence of factor market turnover, international trade issues can only be understood by studying the entire dynamic path of the economy. Long-run relationships should be ignored. The first quote from Paul Krugman represents the widespread view that most important international trade issues can best be understood by focusing on long-run relationships. Many of the assumptions that underlie the most influential model of trade-the Heckscher-Ohlin-Samuelson (HOS) model-are clearly long run in nature and it is understood that the model's predictions are intended to describe long-run relationships. Over the years, there have been many attempts to broaden our scope and begin to take the short run more seriously. The specific factors (SF) model is one such example. It replaces the HOS assumption of complete factor mobility with another extreme assumption-that some factors can only be employed in certain sectors. By now, the relationship between these two models is well known. Reallocating the mobile factors in the SF model allows one to trace out a short-run production possibilities frontier for each set of assumptions about factor mobility. The long-run production possibilities frontier of the HOS model is the outer envelope of all of the

Review of International Economics, 2004

Article 5, Uruguay Round Agreement on Safeguards (emphasis added). "If the Commission makes an af... more Article 5, Uruguay Round Agreement on Safeguards (emphasis added). "If the Commission makes an affirmative determination, it recommends to the President the action that will facilitate positive adjustment by the industry to import competition." USITC (1998) (emphasis added).

Review of International Economics, 1998

The one-sector model of monopolistic competition and intraindustry trade is merged with the Shapi... more The one-sector model of monopolistic competition and intraindustry trade is merged with the Shapiro-Stiglitz model of efficiency wages to show that introducing trade increases employment in both countries. The intuition is that even when employment is held constant, trade improves worker welfare via increased variety of available goods. The increase in worker welfare relaxes the efficiency wage constraint, permitting an increase in employment. The increase in employment magnifies the benefits of trade. The model is calibrated to US data to estimate the employment effects of eliminating all trade and eliminating trade with Mexico and Canada.

Journal of International Economics, 1991

Neoclassical theory suggests that trade patterns are linked to autarkic differences in relative o... more Neoclassical theory suggests that trade patterns are linked to autarkic differences in relative opportunity costs. We demonstrate that when the Heckscher-Ohlin-Samuelson model is extended to allow for unemployment, there are forces present that create multiple free trade equilibria, even when both countries are identical and autarkic equilibrium is unique. There is no necessary link between relative opportunity cos+s and trade patterns. While our primary focus is on search-generated unemployment, we argue that the analysis atso applies to situations where unemployment is generated by minimum wages, efficiency wages, or implicit contracts. *We wish to thank, without implication, Gene Grossman, Andrew John, Richard Brecher, and two anonymous referees for valuable comments made on earlier versions of this paper.

Journal of International Economics, 1999

We argue that trade economists should begin to seriously consider environments in which unemploym... more We argue that trade economists should begin to seriously consider environments in which unemployment is carefully modeled. We introduce such a model, derive several results, and compare them to results derived in full employment models. We argue that some traditional results are probably too narrow (the determinants of comparative advantage) and that some results do not generalize to models with unemployment (the link between trade and income distribution for employed factors). We also show that in some important cases results do generalize (there is an extended Stolper-Samuelson Theorem that links trade to the distribution of income for searching factors) and that our model allows us to address issues that traditional models cannot handle (the impact of trade on unemployment and the welfare of the unemployed).

Journal of International Economics, 2007

Globalization might affect the mix of jobs available in an economy and the rate at which workers ... more Globalization might affect the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and skills and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. There are two types of skills that determine a worker’s productivity in the model: the ability to work with the appropriate technology and the ability to facilitate international commerce. Workers imperfectly acquire these skills on the job. Firms cannot costlessly observe the skills embodied in a worker but can observe each potential recruit’s employment history. In equilibrium, firms self-select into groups that use different networks to fill vacancies. Our results indicate that although falling trade costs may result in greater wage inequality, if trade costs are initially high, it can also lead to a wider path up the jobs ladders and less time spent in entr...

European Economic Review, 2020

Globalization affects the mix of jobs available in an economy and the rate at which workers gain ... more Globalization affects the mix of jobs available in an economy and the rate at which workers gain skills. We develop a model in which firms differ in terms of productivity and workers differ in skills, and use the model to examine how globalization affects the wage distribution and the career path of workers as they move up the jobs ladder. We calibrate the model using many of the same parameters and targeting the same moments of the US economy as Melitz and Redding (2015) and then investigate the impact of globalization. Our results indicate that although falling trade costs results in greater wage inequality, it also leads to a wider path up the jobs ladder and less time spent in entry level jobs.

Review of International Economics, 2016

The Review of Economic Studies, 1994

In dynamic models of unemployment in which the employed consume more than the unemployed, workers... more In dynamic models of unemployment in which the employed consume more than the unemployed, workers are finitely lived, and jobs are lasting, employment transfers consumption from future generations to those currently alive, resulting in a social surplus. That is, these transfers allow the current generation to consume more than its share of the output produced during its lifetime without the

SSRN Electronic Journal, 2014

Engagement in foreign markets can have an impact on firm organization and on the type of occupati... more Engagement in foreign markets can have an impact on firm organization and on the type of occupations that a firm needs. We examine the effect of globalization on the occupational mix using detailed Swedish data that cover all firms and a representative sample of the labor force for 1997-2005. We find a robust relationship between a firm's degree of international integration and its occupational mix. Multinationals, which are the most globally engaged firms, have a distribution of occupations skewed toward the more skilled. Non-multinational exporters have a distribution of occupations less skewed toward skilled compared to multinationals, but more skewed toward skilled occupations compared to Swedish non-exporters (which are the least globally engaged). Moreover, firms tend to have an even more skill intensive distribution of occupations when they mainly export to far away markets, or when they export differentiated goods. Our results are little changed (1) when we control for firm size, productivity, capital intensity, and firm age, (2) when we control for offshoring and R&D expenditures; (3) when we use alternative methods to rank occupations, or (4) when we conduct alternative robustness tests. In addition, the results are very similar for manufacturing and nonmanufacturing, and for foreign and Swedish multinationals. We interpret our results using a decomposition motivated by recent theoretical models of selection into exporting and FDI.

International Trade with Equilibrium Unemployment, 2009

International Trade with Equilibrium Unemployment, 2009

International Trade with Equilibrium Unemployment, 2009

Policy Research Working Papers, 1999

International Trade with Equilibrium Unemployment, 2009

Journal of International Economics, 2014

This paper focuses on the ability of the labor market to efficiently match heterogeneous workers ... more 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.

The Quarterly Journal of Economics, 1985

In a world with multiplicative production uncertainty and implicit labor contracts, we show that ... more In a world with multiplicative production uncertainty and implicit labor contracts, we show that the Rybczynski theorem retains its validity; therefore the quantity version of the Heckscher-Ohlin theorem survives as well. We also show that the Stolper-Samuelson theorem may not hold. A small increase in the price of the capital-intensive good may benefit labor. We derive a strong version of the factor price equalization theorem that shows free trade tends to equalize sector-specific unemployment rates and sector-specific factor prices across countries. Finally, we relate trade patterns to international differences in the degree of risk aversion.

The Economic Journal, 1986

... This situation has changed with * I have benefited from discussions with Wilfred Ethier, Cost... more ... This situation has changed with * I have benefited from discussions with Wilfred Ethier, Costas Azariadis, Joshua Aizenman, Beth Allen, Russell Cooper, Paulo Couthino, Jacques Cremer, Carl Davidson, Matthew Gelfand, Claudia Goldin, Jamie Marquez, John Pomery, Selig ...

The Economic Journal, 1987

The purpose of this paper is to present and analyse a simple two sector general equilibrium model... more The purpose of this paper is to present and analyse a simple two sector general equilibrium model which incorporates some of the real world frictions that keep factor markets from functioning perfectly. In particular, we investigate the performance of the economy when ...

Review of International Economics, 2006

It is often argued that international trade is all about long-run relationships. In this paper, w... more It is often argued that international trade is all about long-run relationships. In this paper, we argue that this view is flawed when factor markets are characterized by turnover. Toward that end, we provide a simple dynamic model of trade with labor market turnover and show that the relationship between the economy's short-run and long-run behavior is more complex than in traditional trade models. For example, in the short run, the economy may produce outside of its long-run frontier. We show that focusing on long-run relationships can lead one to draw faulty policy conclusions, while focusing on its short-run behavior restores sanity. The implication is that in the presence of factor market turnover, international trade issues can only be understood by studying the entire dynamic path of the economy. Long-run relationships should be ignored. The first quote from Paul Krugman represents the widespread view that most important international trade issues can best be understood by focusing on long-run relationships. Many of the assumptions that underlie the most influential model of trade-the Heckscher-Ohlin-Samuelson (HOS) model-are clearly long run in nature and it is understood that the model's predictions are intended to describe long-run relationships. Over the years, there have been many attempts to broaden our scope and begin to take the short run more seriously. The specific factors (SF) model is one such example. It replaces the HOS assumption of complete factor mobility with another extreme assumption-that some factors can only be employed in certain sectors. By now, the relationship between these two models is well known. Reallocating the mobile factors in the SF model allows one to trace out a short-run production possibilities frontier for each set of assumptions about factor mobility. The long-run production possibilities frontier of the HOS model is the outer envelope of all of the

Review of International Economics, 2004

Article 5, Uruguay Round Agreement on Safeguards (emphasis added). "If the Commission makes an af... more Article 5, Uruguay Round Agreement on Safeguards (emphasis added). "If the Commission makes an affirmative determination, it recommends to the President the action that will facilitate positive adjustment by the industry to import competition." USITC (1998) (emphasis added).

Review of International Economics, 1998

The one-sector model of monopolistic competition and intraindustry trade is merged with the Shapi... more The one-sector model of monopolistic competition and intraindustry trade is merged with the Shapiro-Stiglitz model of efficiency wages to show that introducing trade increases employment in both countries. The intuition is that even when employment is held constant, trade improves worker welfare via increased variety of available goods. The increase in worker welfare relaxes the efficiency wage constraint, permitting an increase in employment. The increase in employment magnifies the benefits of trade. The model is calibrated to US data to estimate the employment effects of eliminating all trade and eliminating trade with Mexico and Canada.

Journal of International Economics, 1991

Neoclassical theory suggests that trade patterns are linked to autarkic differences in relative o... more Neoclassical theory suggests that trade patterns are linked to autarkic differences in relative opportunity costs. We demonstrate that when the Heckscher-Ohlin-Samuelson model is extended to allow for unemployment, there are forces present that create multiple free trade equilibria, even when both countries are identical and autarkic equilibrium is unique. There is no necessary link between relative opportunity cos+s and trade patterns. While our primary focus is on search-generated unemployment, we argue that the analysis atso applies to situations where unemployment is generated by minimum wages, efficiency wages, or implicit contracts. *We wish to thank, without implication, Gene Grossman, Andrew John, Richard Brecher, and two anonymous referees for valuable comments made on earlier versions of this paper.

Journal of International Economics, 1999

We argue that trade economists should begin to seriously consider environments in which unemploym... more We argue that trade economists should begin to seriously consider environments in which unemployment is carefully modeled. We introduce such a model, derive several results, and compare them to results derived in full employment models. We argue that some traditional results are probably too narrow (the determinants of comparative advantage) and that some results do not generalize to models with unemployment (the link between trade and income distribution for employed factors). We also show that in some important cases results do generalize (there is an extended Stolper-Samuelson Theorem that links trade to the distribution of income for searching factors) and that our model allows us to address issues that traditional models cannot handle (the impact of trade on unemployment and the welfare of the unemployed).

Journal of International Economics, 2007