The Labour-Market Impact of Globalization


Dr. Bas ter Weel, Economics

Co-operation with Central Planning Bureau, Ministry of Economic Affairs

Further information

Rapid globalization yields a number of important questions concerning the labour market position of different types of workers in a small open economy, such as the Netherlands. In the past, economists have always argued that trade liberalization increases welfare, with the only concerning being the allocation of welfare improvements. Recently, there is attention for the fact that different groups of workers have been affected differently by globalization and that the effects of globalization do not occur along traditional sector lines anymore. This insight is mainly due to the availability of large data sets with matched firm-worker information.

The aim of this project is to investigate at the firm level the effects of globalization on the development of wages, the distribution of wages and employment. An important question is whether the increase in intermediary inputs from abroad (as a result of outsouring/offshoring) have led to the creation or destruction of certain types of jobs. Which sectors will face the largest impact and are most affected? What types of jobs are affected (both positively and negatively)? What are the consequences for the division and allocation of labour? What are the consequences for the demand for labour?

The best way to answer these questions is to monitor firms and workers over time. The CBS and CPB have jointly operated in constructing a panel database of Dutch firms in which among others exports and imports are available at a very detailed level. Detailed information about workers will also be matched to this dataset. This database is almost finished and its use for this project will be very useful and unique in the world. Given the policy attention for the impact of trade on the Dutch economy with the BRIC countries (Brazil, Russia, India and China) special attention will be paid to these countries, both by separately looking at these countries and by distinguishing several types of products that are traded.