Employees of ″globalized″ firms face a riskier, but potentially more rewarding, menu of labor market outcomes. Daveri, Manasse, and Serra document this neglected tradeoff of globalization for a sample of Indian manufacturing firms. On the one hand, the employees of firms subject to foreign competition face a more uncertain stream of earnings and riskier employment prospects. On the other hand, they enjoy a more rapid career growth and have more opportunities to train and upgrade their skills. The negative uncertainty costs and the positive incentive effects of globalization are thus twin to each other. Concentrating on just one side of the coin gives a misleading picture of globalization.This paper—a product of Trade, Development Research Group—is part of a larger effort in the group to examine the effects of trade and investment liberalization in developing countries.
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