Heterogeneous workers, trade, and migration

We analyze the welfare effects of trade and migration, focusing on two-sided horizontal heterogeneity among workers firms. Horizontal (skill-type) generates monopsonistic labor markets as well within-firm wage inequality an endogenous quality worker–firm matches. In a model combining worker with monopolistic competition goods markets, liberalization causes firm exit which raises markdowns worsens average It also increases degree income inequality. Yet, aggregate is higher under free than autarky. Integration leads to two-way migration between symmetric countries. Liberalizing has ambiguous effect matches inequality, but it lower prices thus in both Our advocates opening up simultaneously liberalization.