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Unemployment and interactions between trade and labour market institutions

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Abstract

There is ample evidence that a country's labour market institutions are important determinants of unemployment. This study generalises Davis' (1998) idea according to which the institutions of the trade partners matter also for a country's equilibrium unemployment rate as they generate comparative advantages. Moreover, the empirical investigation provides some evidence that the interactions between bilateral trade and relative labour market regulations affect the equilibrium unemployment rate. Given data limitations in this area, the ambition of this paper is merely to draw the attention to the general relevance of these interactions as complementing factors to other explanations of unemployment. Another interesting finding is that a fairly low regulated country like Canada can be negatively affected because its main trading partner is even less regulated, while a high regulated country like Germany appears rather sheltered because its trading partners are also highly regulated

Suggested Citation

  • Hervé Boulhol, 2008. "Unemployment and interactions between trade and labour market institutions," Documents de travail du Centre d'Economie de la Sorbonne bla08016, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:bla08016
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    Cited by:

    1. Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2011. "Trade and unemployment: What do the data say?," European Economic Review, Elsevier, vol. 55(6), pages 741-758, August.
    2. Braun, Sebastian & Spielmann, Christian, 2012. "Wage subsidies and international trade: When does policy coordination pay?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-42.
    3. Dhamija, Nidhi, 2019. "Trade Liberalization and Unemployment in India: A State Level Analysis," MPRA Paper 95001, University Library of Munich, Germany.
    4. Liu, Zhen & Ngo, Thanh Quang & Saydaliev, Hayot Berk & He, Huiyuan & Ali, Sajid, 2022. "How do trade openness, public expenditure and institutional performance affect unemployment in OIC countries? Evidence from the DCCE approach," Economic Systems, Elsevier, vol. 46(4).
    5. Claire H. Hollweg & Daniel Lederman & Devashish Mitra, 2016. "Structural Reforms and Labour-market Outcomes: International Panel-data Evidence," The World Economy, Wiley Blackwell, vol. 39(7), pages 925-963, July.

    More about this item

    Keywords

    Unemployment; trade; labour market institutions;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • F10 - International Economics - - Trade - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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