PUB - Publikationen an der Universität Bielefeld

This thesis attempts to investigate and analyze the link between technological advancement, international trade, and the labor market. It comprises three independent chapters of which the first two are empirical work and the third one is the theoretical work. The first chapter of the thesis introduces the general overview of the thesis and the main motivations. The second chapter "Job polarization; Evidence from Developing Countries" attempts to investigate and present the evidence of job polarization in the case of the developing countries, using the Ethiopian labor force survey data. Job polarization, which the growth of the employment of both high skilled and low skilled workers at the expense of the middle-skilled once, is a widely discussed phenomenon in the case of advanced countries like for the US (see Autor et al. (2003) and others), for the UK (see Goos and Manning (2007) and Salvatore (2015)), for EU (Goos et al. (2009)) and others. However, there hardly exists the evidence in the case of developing countries, apart from some reports by the World Bank. The starting point for the present chapter is Blanchard and Willman (2016) trade model which shows the hollowing out of the middle-class workers in developed countries and the opposite in the developing countries. Using the labor force survey data from Ethiopian CSA, however, this study finds clear evidence of job polarization in developing countries; Ethiopia. The third chapter, "The impact of Firms' global market engagement on the local labor market", analyses the effect of firms' participation global market via trade or ownership (FDI) on the labor market outcome and inequality using the Ethiopian manufacturing firms survey data. The results from the regression analysis show the firm’s global market engagement through export contributes positively to employment and wage growth. However, the wage gap between skilled and unskilled workers stay significantly positive. Further analysis also shows as the effect is positive, significant for the high and low skilled workers, and negative, significant for middle-skilled workers, which is a confirmation for the evidence of job polarization discussed in chapter two. The fourth chapter "International trade and Equilibrium unemployment with heterogeneous firms and workers" attempts to bridge two strands of economic literature; International trade with heterogeneous firms (the Melitz (2003) model) and the frictional labor market (Pissarides (2000) model). Thus, the model shows the interaction between the labor market and trade variables. We showed that productivity cut-offs are directly affected by trade liberalization and further depends on the labor market tightness. The model also shows as the wage inequality between workers in the exporting and non-exporting sector increases due to trade liberalization.