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Trade openness, real exchange rates and job reallocation: evidence from Belgium

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  • Italo Colantone

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Abstract

This paper investigates the impact of real exchange rate movements on job reallocation at the industry level. The analysis focuses on the manufacturing sector of Belgium, using data for 82 NACE 3-digit industries, over the time span 1996–2002. I find that real exchange rate changes do have a significant impact on job flows, and that this impact is magnified by increasing levels of trade exposure. In particular, a real appreciation is found to lower net employment growth through higher job destruction, while job creation is not significantly affected. These results are in line with previous empirical evidence on the United States, and differ from earlier findings for France and Germany, where the adjustment to real exchange rate shocks has been found to occur mainly through the job creation margin. I suggest that these differences may be explained by the fact that Belgium is a small open economy. Copyright The Author(s) 2012

Suggested Citation

  • Italo Colantone, 2012. "Trade openness, real exchange rates and job reallocation: evidence from Belgium," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 669-706, December.
  • Handle: RePEc:spr:weltar:v:148:y:2012:i:4:p:669-706
    DOI: 10.1007/s10290-012-0132-3
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    References listed on IDEAS

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    3. Ma, Hong & Qiao, Xue & Xu, Yuan, 2015. "Job creation and job destruction in China during 1998–2007," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 1085-1100.
    4. Ligia Melo & Carlos Ballesteros, 2014. "The impact of external factors on job creation and destruction in the Colombian manufacturing sector," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 81, pages 155-186, Julio - D.
    5. Melo, Ligia & Ballesteros, Carlos, 2014. "Impacto de los factores externos sobre la creación y destrucción de empleo en el sector manufacturero colombiano," Revista Lecturas de Economía, Universidad de Antioquia - CIE, issue 81, pages 155-186, April.

    More about this item

    Keywords

    Trade openness; Real exchange rates; Job reallocation; F16; F4;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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