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Unemployment effect of WTO ascension: Evidence from a natural experiment

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  • Chinedu Increase Onwachukwu
  • Ekene Francis Okagbue

Abstract

Because international trade affects the rate of unemployment, ascending the World Trade Organization (WTO) established to improve the outcomes of trade will impact employment. By using a dataset covering 175 countries between 1991 and 2017 and exploiting the exogenous variation in the ascension years of countries, we estimate the causal effect of ascending WTO on the unemployment rate. Difference-in-difference estimates imply that unemployment rate reduced by 13.7 percent. Countries that ascended between 2011 and 2017 had the highest reduction in unemployment compared to those that joined between 1995 to 1999 and 2000 to 2010. Also, the effect of ascension is more for developing countries than developed countries. Our results are robust to the matching of countries by ascension period and are not influenced by any simultaneous shock or pre-existing political and economic conditions. These results point to the need for non-member countries to join the organization.

Suggested Citation

  • Chinedu Increase Onwachukwu & Ekene Francis Okagbue, 2019. "Unemployment effect of WTO ascension: Evidence from a natural experiment," International Economics, CEPII research center, issue 159, pages 48-55.
    • Handle: RePEc:cii:cepiie:2019-q3-159-5
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    File URL: https://www.sciencedirect.com/science/article/pii/S2110701718303147
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    Cited by:

    1. Gnangnon, Sèna Kimm, 2022. "Effect of Aid for Trade flows on the Accession to the World Trade Organization," EconStor Preprints 261331, ZBW - Leibniz Information Centre for Economics.

    More about this item

    Keywords

    World Trade Organization; Ascension; Unemployment rate; Difference-in-difference;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F00 - International Economics - - General - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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