Essays on International Trade and Labor

This dissertation comprises three essays examining the impact of globalization on the labor market and the effect of financial education on demand for financial services. The first essay analyzes the interaction between trade liberalization and the allocation of skill across industries. It develops an assignment model of the labor market in which high skill workers are matched with high non-labor input productivity industries. The essay argues that cross-country differences in productivity rankings cause assignment reversals, meaning that the ranking of industries by skill intensity varies across countries. When assignment reversals occur trade integration increases wage inequality regardless of a country's skill endowment. Evidence from industry wage data is used to demonstrate the existence of assignment reversals and to support the labor allocation mechanism proposed by the model.;The second essay is concerned with cross-country technology diffusion. The essay develops a model of technology transfer when technology is embodied in human capital and learning requires on-the-job communication between managers and workers. Patterns of knowledge diffusion depend on where high knowledge managers work and how much time they allocate to training workers. In the open economy managers face a cross-country trade-off between labor costs and the value of knowledge transfer. Complementarity between a country's Hicks-neutral efficiency and a manager's technological knowledge makes knowledge more valuable in the North meaning that high knowledge managers choose to work in the North and globalization precipitates a brain drain of high knowledge Southern agents to the North. Consequently, knowledge transfer serves to magnify, not diminish, pre-existing productivity differences between countries.;The third essay combines survey evidence from Indonesia and India with a field experiment in Indonesia to test alternative explanations of low demand for financial services in emerging markets. The survey data shows a strong correlation between financial literacy and behavior. However, in the field experiment a financial education program has limited effects, increasing demand for bank accounts only for those with low education or financial literacy. In contrast, small subsidies greatly increase demand.