Empirical Studies on Firm and Labor Market Dynamics
Abstract: This thesis consists of three self-contained papers. The first paper, Sorting on Unobserved Skills into New Firms, adds to the literature on worker characteristics and post-entry firm performance by putting the unobserved quality of workers in the center of analysis. Although human capital features prominently in theoretical work on the post-entry performance of new firms, empirical analysis has largely overlooked the unobserved component of human capital, focusing instead on years of education or labor market experience. I find strong evidence that new firms, on average, employ workers of lower unobserved quality relative to incumbent firms.The second paper, The Spatial Dimension of Import Competition, contributes to the literature on import competition by assessing whether the distance between producers and importers within a country matters for import competition effects at the product level. Using detailed geographical information about the location of all manufacturing firms in Sweden during the period 2005–2014, we find strong evidence of an increased efficiency in the domestic production when imports surge, but that the effect diminishes with the distance between the producer and the importer.The third paper, Lasting Effects of an Import Shock: Channels of Adjustment, exploits a quasi-natural experiment to study the channels of labor market adjustment to an import shock. Using matched employer--employee data from Sweden, I study workers' adjustment after the removal of quotas set out by the Multi-Fiber Arrangement for Chinese producers upon China's entry into the WTO. I find evidence of substantial losses in terms of earnings and employment. Sectoral mobility mitigates a portion of these losses, but gives rise to substantial adjustment frictions. The largest losses accrue to workers with skills specific to the exposed industry. Some losses are recovered through mobility across labor markets, but only workers in high-skill occupations benefit from this channel.
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