Selected Research Outputs

Publications

  1. Davidson, Carl, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chu Zhu (2016), “Global Engagement, Complex Tasks, and the Distribution of Occupational Employment”, Review of International Economics, Vol. 24(4), pp. 717-736.
    Abstract: We construct a task-based model of the firm’s choice of occupational inputs to examine how that choice varies with greater global engagement. We assume that more complex tasks are more costly to complete. Within the structure of our model, firms skew employment toward occupations engaged in more complex tasks. Moreover, the distribution of employment is more skewed for more globalised firms, while it is less skewed for larger firms. These results are consistent with our previous empirical finding.
  2. Davidson, Carl, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chun (2017), “Global Engagement and the Occupational Structure of Firms” European Economic Review, Vol. 100, pp. 273-292. Link to 2014 working paper version.
    Abstract: Global engagement can impact firm organisation and the occupations firms need. We use a simple task-based model of the firm’s choice of occupational inputs to examine how that choice varies with global engagement. We reveal a robust and causal relationship between global engagement and the skill mix of occupations within firms, using Swedish matched employer-employee data that link firms and the labor force for 1997–2005. Taking an instrumental variable approach, we find that increased export shares (driven by higher world import demand) skew the labor mix more toward high-skill occupations. Our results suggest that global engagement may require firms to employ more skilled labor to undertake complex tasks embodied in international businesses, which have further implications for the demand for specific occupational skills and overall wage dispersion.
  3. H. Görg, P. Henze, V. Jienwatcharamongkhol, D. Kopasker, H. Molana, C. Montagna, F. Sjöholm “Firm Size Distribution and Employment Fluctuations: Theory and Evidence”,  Research in Economics, vol 71, no.4, pp. 690-703. Link
    Abstract: We show that the firm-size distribution is an important determinant of the relationship between an industry's employment and output. A theoretical model predicts that changes in demand for an industry's output have larger effects on employment, resulting from adjustments at both the intensive and extensive margin, in industries characterised by a distribution that has a lower density of large firms. Industry-specific shape parameters of the firm size distributions are estimated using firm-level data from Germany, Sweden and the UK, and used to augment a relationship between industry-level employment and output. The empirical results align with the predictions of the theory.
  4. Davidson, Carl, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chu Zhu (2016), “Global Engagement, Complex Tasks, and the Distribution of Occupational Employment”, Review of International Economics, Vol. 24(4), pp. 717-736. Link to 2015 working paper version.
    Abstract: We construct a task-based model of the firm’s choice of occupational inputs to examine how that choice varies with greater global engagement. We assume that more complex tasks are more costly to complete. Within the structure of our model, firms skew employment toward occupations engaged in more complex tasks. Moreover, the distribution of employment is more skewed for more globalized firms, while it is less skewed for larger firms. These results are consistent with our previous empirical finding.
  5. Davidson, Carl, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chu Zhu (2018), “Globalization and the Jobs Ladder”, Lund University Department of Economics Working Paper No. 2018: 31 Link. https://swopec.hhs.se/lunewp/abs/lunewp2018_031.htm Abstract: 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 entry level jobs. The key assumptions and predictions are confirmed in data on recruitments and job mobility in Sweden.

Working papers

  1. Molana, H., C. Montagna, G.E. Onwordi (2017) “Reforming the Liberal Welfare State: International Shocks, Unemployment and Household Income Shares”, Centre for European Labour Markets, University of Aberdeen DP 17-6; WSF Working Paper Series GlobLabWS #1/2017. Link to working paper version:
    Abstract: We examine how labour market and welfare state reforms affect long-run unemployment and the dynamic behaviour of an economy characterised by a liberal welfare state system in response to international shocks. Reform packages exist that can improve upon the labour market outcomes of a liberal welfare state system. Even when reducing labour market flexibility and steady-state unemployment, flexicurity reforms amplify the impact of exogenous foreign shocks on unemployment and GDP; training expenditure by improving firms’ productivity, however, reduce these effects.
  2. Görg, H., C. Hornok, C. Montagna and G. E. Onwordi (2018), “Employment to Output Elasticities & Reforms towards Flexicurity: Evidence from OECD Countries”, Kiel Working Paper 2117 and IZA Discussion Paper 11938. Link to Working Paper
    Abstract: How do labour market policies influence employment's responsiveness to output fluctuations (employment-output elasticity)? We revisit this question on a panel of OECD countries, which also incorporates the period of the Great Recession. We distinguish between passive and active labour market policies and allow for their interactions, i.e. the policy mix, to play a role. We find that the effects of any single policy change are shaped by the broader existing policy-mix within which it takes place. Finally, we evaluate the effect of a move to 'flexicurity' on the employmentoutput elasticity in each country.

  3. Heyman, F. F. Sjöholm (2018), “Globalization, Job Tasks and the Demand for Different Occupations”, WSF Working Paper Series GlobLabWS #1/2018 Link to Working Paper
    Abstract: Globalization has increased during last decades with resulting structural changes of production and labor demand. This paper examines how firms’ increased global engagement affect the structure of the workforce. We find that the aggregate distribution of occupations in Sweden has become more skilled between 1997 and 2013. Moreover, we find that firms with a high degree of international orientation have a relatively skilled distribution of occupations and firms with low international orientation have a relatively unskilled distribution of occupations. High- and low-skilled occupations have increased in importance whereas middle skilled occupations have declined with a resulting job polarization.

  4. Molana, H., C. Montagna, G.E. Onwordi (2018a), “De-Globalisation, Welfare State Reforms and Labour Market Outcomes”, WSF Working Paper Series GlobLabWS #2/2018. Link to Working Paper
    Abstract: De-globalisation, by raising trade barriers in an economy characterised by vertical linkages in production and imperfect goods and labour markets, is shown to increase unemployment across skill levels, deteriorate job-skill-match quality, and reduce aggregate income. These effects are enhanced when the firm-level productivity distribution is more skewed towards less productive firms, and are not necessarily moderated by maintaining frictionless mobility of capital across borders. A Flexicurity reform of a liberal welfare state is shown to dampen the adverse effects of de-globalisation.  The effectiveness of the reform is strengthened if the package includes a rise in public investment in job-search/matching efficiency.

  5. Molana, H., C. Montagna, G.E. Onwordi (2018a), “Comparing Welfare States: International Shocks, Labour Market Participation and Mismatch”, WSF Working Paper Series GlobLabWS #3/2018.
    Abstract: Despite an emerging consensus around a ‘recalibration’ agenda towards flexicurity, welfare state models continue to be highly country-specific and so are the responses of countries to international shocks. We find that the Nordic system can outperform the liberal and continental regimes in moderating the adverse effects of shock on aggregate employment, labour force participation, job-match quality and vacancies – even though it is likely to result in a greater volatility in aggregate market conditions Importantly, our results suggest that key to this system’s success is not labour market flexibility, but its social investment dimension embedded in employability, enabling and activation policies.

  6. Molana, H., C. Montagna, G.E. Onwordi (2018a), “Competitive Selection, Globalisation and the Labour Markets: Welfare State and Industrial Policies”, WSF Working Paper Series GlobLabWS #4/2018. Link to Working Paper
    Abstract: The recent wave of de-globalisation in the form of protectionism has provoked concerns about global economic prospects. Using a stylised model of a small open economy we find that these concernsare justified: raising trade barriers reduces the level of economic activity and leadsto a deterioration in labour market outcomes. We then show that implementing certain labour and product market policies can compensate for the negative effects of the rise in trade cost on labour market outcomes and limit the reduction in GDP.