Trade and Unemployment in Germany: An Empirical Exploration and Some Theory
AbstractThis paper investigates the link between unemployment and external trade in Germany, using data on unemployment, international trade and economic activity for the 16 German federal states (Länder). With panel data econometrics we show that international trade as measured by state-wise trade shares have a significant negative impact on state-wise unemployment rates. We discuss to what extent this reflects mercantilist tendencies embedded in the political economy of the Federal Republic. There is no clear evidence in favor of simple mercantilism. We suggest three alternative explanations, linked to the structural rigidities of the German labor market, government involvement in the education and training system and certain labor market policies which provide government-subsidized unemployment insurance benefitting (mainly) export industries.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena in its series Global Financial Markets Working Paper Series with number 2011-24.
Date of creation: 2011
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International trade; panel study;
Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
- O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
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