good job, bad job, no job??

Here's a very provocative new NBER working paper by Don Davis and James Harrigan titled "Good Jobs, Bad Jobs & Trade Liberalization" (Here is an ungated version)

In it they combine efficiency wage macro theory with Melitz's 2003 Econometrica piece on trade and industry efficiency.

Their bottom line?

"Trade in our model has a strong tendency to increase variety, lower prices, and shift production toward more efficient firms. However, it also has a strong tendency to threaten what workers consider "good jobs" and could contribute to a rise in structural unemployment."

I've always been a big fan of efficiency wages and find them underutilized in current model building, so this paper is intriguing to me.