Trade in Unemployment (original) (raw)

Trade and unemployment: What do the data say

European Economic Review, 2011

This paper documents a robust empirical regularity: in the long-run, higher trade openness is causally associated to a lower structural rate of unemployment. We establish this fact using: (i) panel data from 20 OECD countries, (ii) cross-sectional data on a larger set of countries. The time structure of the panel data allows to deal with endogeneity concerns, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we carefully purge the data from business cycle eects, include a host of institutional and geographical variables, and control for within-country trade. Our main nding is robust to various denitions of unemployment rates and openness measures. The preferred specication suggests that a 10 percent increase in total trade openness reduces unemployment by about one percentage point. Moreover, we show that openness aects unemployment mainly through its eect on TFP and that labor market institutions do not appear to condition the eect of openness.

The Impact of Trade on Unemployment Soliudeen Babatunde Adekunle

2016

International trade has been one of the most fiercely debated economic issues. While standard trade theories state the benefits of free trade, several economist have raised questions about the validity of these theories and of the claimed benefits of trade. These debated have been intensified as we progressed in the era of globalization. In this thesis we focus on one of these debate topics that is we attempt to investigate the impact of trade on unemployment. In other words this study is an empirical investigation of how trade volume impacts the unemployment rate. The hypothesis of the paper is that, like the standard trade theory has suggested, the more is the trade, the bigger are the welfare and growth gains, and hence the lower is the unemployment. To this end, the study gathers data for 20 countries, 9 of which are from low income countries and 11 of which are from high income countries. Panel data regressions are carried for three different samples: low-income countries only, high-income countries only and high and low income countries together. In all regressions we find a supportive evidence that the trade impacts unemployment rate negatively. Controlling for GDP growth rates and accounting for granger-causality issues do not change the results.

International trade and unemployment: Theory and cross-national evidence

Journal of International Economics, 2009

In this paper, we present two alternative models of trade and unemployment, in which unemployment is generated through a search mechanism. The basic framework of the …rst model is Ricardian in that the only factor of production is labor and trade is based on relative technological di¤erences. The second model has a Heckscher-Ohlin (H-O) framework with two factors of production, namely labor and capital that are intersectorally mobile. Using cross-country data on various measures of trade policy, unemployment and a variety of controls, we …nd strong evidence for the Ricardian prediction that unemployment and trade openness are negatively related (protection and unemployment are positively related). We do not …nd any support for the H-O prediction that this relation between trade openness and unemployment changes from negative to positive as we move from labor-abundant to capital-abundant countries. Our results are robust to the inclusion of controls for labor market institutions and macroeconomic distortions. They hold for both ordinary least squares and instrumental-variables approaches, where the latter accounts for the endogeneity of trade policy to unemployment and possible measurement errors in trade policy variables.

The Impact of International Trade on Unemployment: Evidence from OECD Countries

This study aims to analyze the detail effect of trade on unemployment by investigating data from 34 OECD countries with mathematical calculations, analytical data tests, and graphical proof. We established the result using panel data regressions. The mathematical model formulation was developed by taking the values of different variables for those countries. Some analyses, tests, and graphical presentations were made to get a clear idea about how the trade is making some significant relationships between these countries. To exemplify the model, we made a correlation to see the association with Labor Market Institution, Product Market Regulations, Output Gap, Trade openness, Export, Import, and GDP. A significant relation has been found applying this correlation. To see whether the fixed effect model or random effect model is appropriate for our model, we used the Hausman test. From the scatterplot graph, some important contacts found which agree with our study. The data are taken from different official websites, and trade openness has also been calculated to examine whether the result is significant or not. Finally, after calculating, analyzing, conducting several tests, a noteworthy conclusion was established to support our study. One of the significant findings of this study is independent variable trade, along with some supportive variables, had a negative relationship with the dependent variable unemployment, which means that the more trade within a country will have less unemployment rate. On the other hand, less trade will refer to a higher unemployment rate. Another important outcome of this research is that the trade has a strong relationship with the unemployment rate, and in the long run, it will show a significant result as well. The more trade openness creates more job for a country and reduce the unemployment problem hence lead a nation towards development.

Trade and Unemployment Revisited: Do Institutions Matter?

The World Economy, 2014

This paper revisits the trade to unemployment nexus for Germany based on the estimation of a model featuring heterogeneous firms and search unemployment. We structurally estimate parameters that match the key moments of the German labour market. Our estimation and calibration are based on a single plant‐level data source, that is, the IAB establishment and worker panel. The calibration shows that trade liberalisation reduces unemployment in the long run. In our counter‐factual policy simulations, we focus on the effect of labour market policies on the trade and unemployment nexus and we explore how the magnitude of the effects differs under different bargaining regimes. Labour market institutions have stronger effects under collective bargaining. Compared with trade or the bargaining power of unions, the effect of unemployment benefits on unemployment turns out to be rather modest.

International Trade and Unemployment-the Worker-selection Effect

Review of International Economics, 2014

This paper analyzes how trade liberalization in ‡uences the unemployment rate of workers with di¤erent abilities. We re…ne the Melitz (2003) framework to account for trade unions and heterogeneous workers, who di¤er with respect to their abilities. Our main …ndings are: (i) highability workers pro…t from trade liberalization in terms of higher wages and higher employment; (ii) the least e¢ cient workers loose their job and switch to long-term unemployment (worker-selection e¤ect); (iii) if a country is endowed with a large fraction of low-skilled workers, trade liberalization leads to a rise in aggregate unemployment. In this case, trade liberalization may harm a country's welfare.

Trade and labor market outcomes

2011

ABSTRACT This paper reviews a new framework for analyzing the interrelationship between inequality, unemployment, labor market frictions, and foreign trade. This framework emphasizes firm heterogeneity and search and matching frictions in labor markets. It implies that the opening of trade may raise inequality and unemployment, but always raises welfare. Unilateral reductions in labor market frictions increase a country's welfare, can raise or reduce its unemployment rate, yet always hurt the country's trade partner.

International Trade and Unemployment in Less Developed Countries

Theoretical Economics Letters, 2012

The main interest focus of this paper is the relation between international trade and the labour market, with an emphasis on the unemployment rate, and the allocation of workers among sectors. A general trade equilibrium model with three sectors is constructed for a less developed country. An informal and un-tradable sector is characterised by flexible wages, while the other two sectors are tradable, export and import sectors. The model imposes a binding minimum wage on unskilled labour and wage distortions on skilled labour. Comparative statics are used to analyse the effects on the labour market of an open economy, a rise in the minimum wage and a positive productivity shock in the export sector.

Impact of Trade Openness on Unemployment: East, South and Southeast Asian Countries (2006 – 2016)

Zenodo (CERN European Organization for Nuclear Research), 2022

Recent statistics have shown how trade has grown quickly over the last decades in East, South, and Southeast Asian countries. East and Southeast Asian countries have been among the most dynamic participants in international trade. It strongly implies estimating how trade openness effects unemployment in East, South, and Southeast Asian economies. This paper empirically investigates the impacts of measures of trade openness on the unemployment rate in an unbalanced panel context for the period 2006-2016. The analysis focuses on the 16 east, south, and Southeast Asian countries, which are highly ranked in terms of their trade openness: Philippines,