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Sectoral Job Effects of Trade - An Input-Output Analysis for Germany

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  • Maren Lurweg
  • Jens Oelgemöller
  • Andreas Westermeier
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    Abstract

    The current globalisation process is characterized by the emergence of global value chains. That is, production processes are becoming increasingly geographically fragmented. Not only are final goods traded internationally, but in particular, trade in intermediate goods and services has increased significantly over time. In the industrialised countries, the manufacturing sectors were the first that were compelled to face the challenges of globalisation. When services were still considered non-tradable, manufacturing firms had already decided to relocate their production sites to developing or emerging economies, due to lower wage levels abroad and increasing price competition domestically. In this paper, we use input-output analysis to explore the relationship between trade and both job creation and job destruction in the German manufacturing industry in 2005. The results show that being integrated into the world economy is advantageous for the German economy. In 2005, the net exports of the manufacturing industries led to trade-induced job gains of around 2,400,000. This figure is equivalent to 6.2 per cent of total German employment. Furthermore, the job effects of trade were positive for a large majority of countries. The greatest job gains resulted from trade with the United States, the United Kingdom and France. Interestingly, even trade with the new EU Member States is beneficial in terms of job creation.

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    File URL: http://www.wiwi.uni-muenster.de/cawm/forschen/Download/Diskbeitraege/DP-19_Lurweg-Oelgemoeller-Westermeier-Sectoral-Job-Effects-of-Trade.pdf
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    Paper provided by Institute of Spatial and Housing Economics, Munster Universitary in its series Working Papers with number 200113.

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    Handle: RePEc:muc:wpaper:200113

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    Keywords: input-output analysis; international trade; employment;

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    References

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    1. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
    2. Kowalewski, Julia, 2009. "Methodology of the input-output analysis," HWWI Research Papers 1-25, Hamburg Institute of International Economics (HWWI).
    3. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-97, December.
    4. Danièle Meulders & Robert Plasman & François Rycx, 2004. "Minimum wages, low pay and unemployment," ULB Institutional Repository 2013/7740, ULB -- Universite Libre de Bruxelles.
    5. Margit Molnár & Nigel Pain & Daria Taglioni, 2007. "The Internationalisation of Production, International Outsourcing and Employment in the OECD," OECD Economics Department Working Papers 561, OECD Publishing.
    6. Marin, Dalia, 2004. "A Nation of Poets and Thinkers - Less so with Eastern Enlargement? Austria and Germany," CEPR Discussion Papers 4358, C.E.P.R. Discussion Papers.
    7. Koen De Backer & Norihiko Yamano, 2007. "The Measurement of Globalisation using International Input-Output Tables," OECD Science, Technology and Industry Working Papers 2007/8, OECD Publishing.
    8. Danièle Meulders & François Rycx & Robert Plasman, 2004. "Minimum Wages, low pay and unemployment: introduction," ULB Institutional Repository 2013/7704, ULB -- Universite Libre de Bruxelles.
    9. Alexander Hijzen & Holger Görg & Robert C. Hine, 2005. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Economic Journal, Royal Economic Society, vol. 115(506), pages 860-878, October.
    10. Martin Falk & Yvonne Wolfmayr, 2005. "Employment Effects of Outsourcing to Low Wage Countries. Empirical Evidence for EU Countries," WIFO Working Papers 262, WIFO.
    11. Erica L. Groshen & Bart Hobijn & Margaret M. McConnell, 2005. "U.S. jobs gained and lost through trade: a net measure," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 11(Aug).
    12. Falk, Martin & Wolfmayr, Yvonne, 2008. "Services and materials outsourcing to low-wage countries and employment: Empirical evidence from EU countries," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 38-52, March.
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