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Retain and retrain: Firms’ workforce organization in response to trade

Princeton University - PRINCETON, NEW JERSEY - 2018

One of the margins of adjustment of firms in response to the intensification of international trade suggested in the literature is a firm’s organization. This project analyses firms’ organizational choices and workforce recomposition in response to international trade, and their impact in terms of occupational mobility and human capital accumulation. What are the firms’ choices concerning their employees: do they retain and retrain their workers or is workers’ turnover the optimal choice? What factors determine such choice: the type of shock faced by the firm, the firms’ characteristics (size, productivity, multiple plants), the characteristics of the local labor market, or the characteristics of workers? These researchers develop a structural model of organizational choice in order to estimate what part of occupational mobility costs stems from firms choices, and the resulting impact of international trade on human capital accumulation.