|Felbermayr, Gabriel; Prat, Julien; Schmerer, Hans-Jörg (2011): Trade and unemployment: What do the data say? In: European Economic Review, Vol. 55, No. 6: pp. 741-758|
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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.
Economics > Chairs > CESifo-Professorship for International Trade
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 08:58|
|Last Modified:||29. Apr 2016 09:17|
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Trade and unemployment: what do the data say? (deposited 15. Apr 2014 08:59)
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