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Trade and Turnover: Theory and Evidence

  • Carl Davidson
  • Steven J. Matusz

Is the pattern of trade correlated with cross-sector differences in job turnover? Theoretically, external shocks feed through to changes in domestic employment and cross-sector differences in turnover give rise to compensating wage differentials, which feed through to output prices. Using two different datasets on turnover, we find strong evidence that normalized US net exports by sector are negatively correlated with job destruction and worker separation rates. Weaker evidence suggests a positive correlation between normalized net exports and job acquisition. Using sector-specific job destruction data for both Canada and the US, we find confirmation of the theoretical prediction that normalized net exports to Canada are negatively related to the ratio of the US job destruction rate to the Canadian job destruction rate. Copyright 2005 International Monetary Fund.

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Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 13 (2005)
Issue (Month): 5 (November)
Pages: 861-880

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Handle: RePEc:bla:reviec:v:13:y:2005:i:5:p:861-880
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  1. Haveman, J.D., 1994. "The Influence of Changing Trade Patterns of Displacements of Labor," Papers 94-012, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
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