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Employment and exchange rates: the role of openness and technology

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Author Info
Fernando Alexandre () (Universidade do Minho - NIPE)
Pedro Bação () (GEMF and Universidade de Coimbra)
João Cerejeira () (Universidade do Minho - NIPE)
Miguel Portela () (Universidade do Minho - NIPE and IZA)

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Abstract

Real exchange rate movements are important drivers of the reallocation of resources between sectors of the economy. Economic theory suggests that the impact of exchange rates should vary with the degree of exposure to internacional competition and with the technology level. This paper contributes by bringing together these two views, both theoretically and empirically. We show the both the degree of openness and the technology level mediate the impact of exchange rate movements on labour market developments. According to our estimations, whereas employment in high-technology sectors seems to be relatively immune to changes in real exchange rates, these appear to have sizable and significant effects on highly open low-technology sectors. The analysis of job flows suggests that the impact of exchange rates on these sectors occurs through employment destruction.

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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 16/2009.

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Date of creation: 2009
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Handle: RePEc:nip:nipewp:16/2009

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Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
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Related research
Keywords: exchange rates; international trade; employment destruction.;

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Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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References listed on IDEAS
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    Other versions:
  3. Fernando Alexandre & Pedro Bação & João Cerejeira & Miguel Portela, 2009. "Aggregate and sector-specific exchange rate indexes for the Portuguese economy," GEMF Working Papers 2009-05, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
    Other versions:
  4. John Haltiwanger & Stefano Scarpetta & Helena Schweiger, 2006. "Assessing Job Flows across Countries: The Role of Industry, Firm Size and Regulations," IZA Discussion Papers 2450, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375. [Downloadable!] (restricted)
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  16. Michael W. Klein & Scott Schuh & Robert K. Triest, 1999. "Job creation, job destruction, and the real exchange rate," Working Papers 99-11, Federal Reserve Bank of Boston. [Downloadable!]
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  17. Ekholm, Karolina & Moxnes, Andreas & Ulltveit-Moe, Karen-Helene, 2008. "Manufacturing restructuring and the role of Real exchange rate shocks: A firm level analysis," CEPR Discussion Papers 6904, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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    Other versions:
  19. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932.
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This page was last updated on 2009-11-21.

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