Labor market effects of knowledge spillovers

Date

2010-12

Author

Bayraktar Sağlam, Bahar
Sayek, Selin

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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This paper studies the diffusion of technology that occurs from Multinational Enterprises to domestic firms via worker mobility. It concentrates on the wage and unemployment implications of diffusion of knowledge through labor mobility in the local labor market. We construct a search model where the labor mobility is restricted by the existence of binding contracts. Findings of the model reveal that knowledge spillovers through the movement of workers from foreign to local firm lower the firm premium and the skill premium. Further results indicate that technological progress raising the productivity gap between the foreign and the local firm leads to an increase in the unemployment rate, the firm premium and the skill premium.

Subject Keywords

Foreign investment, Skill premium, Firm premium, Knowledge spillover, Search models

URI

http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/359
https://hdl.handle.net/11511/58368

Collections

Department of Economics, Article