Dario Pozzoli receives grant from Otto Mønsteds Fond

Associate Professor at Department of Economics at CBS, Dario Pozzoli has reveived a grant for DKK15,000 from Otto Mønsteds Fond for use during his research stay in the US at University of California San Diego, Santa Cruz, where he will be working on the following projects:

1.       Coordination of hours worked, wage differentials and the elasticity of labor supply to tax changes (with Claudio Labanca, University of California San Diego).
   Abstract
   In this study we assume that firms have, to different extents, interest in coordinating hours worked of employees possessing different skills. We thus use Danish matched employer-employee data to investigate how the coordination of hours worked affects wages and hours. In particular, we start by focusing on how it contributes to the existence of wage differentials across firms. We then analyze how the coordination of hours affects the elasticity of labor supply to tax rate changes.

2.       Trade, Skill premium, and Skill Upgrading (with Grace Gu, University of California Santa Cruz and Samreen Malik, New York University)
   Abstract
   With globalization, many important economic issues have emerged from trade integration in many countries all over the world, including Denmark. Two of such crucial and increasingly popular questions that people have asked are: 1) given domestic skill distribution, how does international trade affect a country’s wage dispersion among workers with different skills (i.e., skill premium); and 2) how does this trade-induced changes of skill premium affect people’s skill upgrading behavior thus the country’s skill distribution. Existing literature has examined them separately (Costinot and Vogel 2010; Egger and Kreickemeier 2009; Yeaple 2005; Maggi and Grossman 2000 to cite a few), but none has put the pieces together both theoretically and empirically through their linkage of the skill distribution.[1] Bombardini et al. 2012 provide empirical evidence about the impact of exporter’s skill distribution on trade and but leave an important issue unresolved. While they openly acknowledge a reverse causality problem in their estimations, their analysis is rather salient on the impact of trade on the mean and the variance of the skill distribution. This project is set out to fill this gap. In particular, we will develop a theoretical model and will provide empirical evidence on how skill premium changes induced through trade integration may significantly affect individual's skill upgrading decisions, which may in turn affect the overall average skill level as well as skill diversity in the economy. Our theoretical model aims to first determine how skill premium is determined through trade integration, and second whether individuals adjust their skills as a result of trade induced skill premium changes. Such a model then explains the dynamics in the distribution of skills in the economy over time.