Trade and unemployment: What do the data say?

Felbermayr, Gabriel; Prat, Julien und Schmerer, Hans-Jörg (2011): Trade and unemployment: What do the data say? In: European Economic Review, Bd. 55, Nr. 6: S. 741-758

Abstract

This paper documents a robust empirical regularity: in the long-run, higher trade openness is associated with 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 us to control for unobserved heterogeneity, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we purge the data of business cycle effects, include a host of institutional and geographical variables, and control for within-country trade. Our main finding is robust to various definitions of unemployment rates and openness measures. Our benchmark specification suggests that a 10 percentage point increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point.

• Dokumententyp: Zeitschriftenartikel
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Lehrstühle > CESifo-Professur für Außenwirtschaft
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• Sprache: Englisch