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Trade Liberalization and the Aggregate Matching Function in India

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  • Woong Lee

    (Sejong National Research Complex)

Abstract

This paper investigates the link between trade liberalization and the job-matching process in India by estimating an aggregate matching function by incorporating trade openness as a proxy for trade liberalization. Monthly data are drawn from the National Employment Service's Employment Exchange, India's only public employment service. The results show that trade liberalization leads to a decline in the number of new hires. This implies the exacerbation of matching efficiency, described by an outward shift of the Beveridge curve. This finding is in accordance with a widely held public view that trade liberalization increases unemployment. Therefore, the Indian government should continue carrying out structural reforms for the Indian economy to deal with the inefficiencies in the labor market due to external liberalization.

Suggested Citation

  • Woong Lee, 2017. "Trade Liberalization and the Aggregate Matching Function in India," Asian Economic Papers, MIT Press, vol. 16(1), pages 120-137, Winter/Sp.
    • Handle: RePEc:tpr:asiaec:v:16:y:2017:i:1:p:120-137
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    Cited by:

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    2. Mehmet Huseyin Bilgin, 2019. "Trade Liberalization: Is It Desirable for All Developing Economies?: A Literature Review," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 199-204, December.

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    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G00 - Financial Economics - - General - - - General

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