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International trade, technological shocks and spillovers in the labour market: a GVAR analysis of the US manufacturing sector

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  • P. Hiebert
  • I. Vansteenkiste

Abstract

We empirically analyse the response of labour market related variables in the US manufacturing sector to various shocks, notably to trade openness and technology, as well as examining spillovers from industry-specific labour market shocks. The econometric approach involves an application of the recently developed Global Vector Autoregression methodology of Dees et al. (2007) to 12 manufacturing industries over the period 1977-2003. The framework allows us to analyse the response of a standard set of labour-market related variables (employment, real compensation, productivity and capital stock) to exogenous factors (a sector-specific measure of trade openness, a common technology and oil price shock), along with industry spillovers using specific measures of manufacturing-wide variables for each sector. Generalized impulse responses indicate that increased trade openness negatively affects real compensation, has negligible employment effects and leads to higher labour productivity. These impacts, however, are relatively weaker than those induced by technology shocks, with the latter positively and significantly affecting both real compensation and employment. There is also evidence of positive spillovers across industries from sector-specific employment and productivity shocks. Impact elasticities suggest strong intra-sectoral linkages for employment and capital stock formation, contrasting with weak linkages for what concerns real compensation and productivity.

Suggested Citation

  • P. Hiebert & I. Vansteenkiste, 2010. "International trade, technological shocks and spillovers in the labour market: a GVAR analysis of the US manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 42(24), pages 3045-3066.
  • Handle: RePEc:taf:applec:v:42:y:2010:i:24:p:3045-3066
    DOI: 10.1080/00036840801964864
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    References listed on IDEAS

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    Cited by:

    1. Inoue,Tomoo & Kaya,Demet & Ohshige,Hitoshi, 2015. "The impact of China?s slowdown on the Asia Pacific region : an application of the GVAR model," Policy Research Working Paper Series 7442, The World Bank.
    2. Alexander Chudik & M. Hashem Pesaran, 2016. "Theory And Practice Of Gvar Modelling," Journal of Economic Surveys, Wiley Blackwell, vol. 30(1), pages 165-197, February.
    3. Carlo A. Favero, 2012. "Modelling and Forecasting Yield Differentials in the euro area. A non-linear Global VAR model," Working Papers 431, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    4. Neil Ericsson & Erica Reisman, 2012. "Evaluating a Global Vector Autoregression for Forecasting," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(3), pages 247-258, August.
    5. Hany Abdel-Latif & Tapas Mishra & Anita Staneva, 2015. "Arab Countries Between Winter and Spring: Where Democracy Shock Goes Next!," Working Papers 954, Economic Research Forum, revised Oct 2015.
    6. TengTeng Xu, 2012. "The Role of Credit in International Business Cycles," Staff Working Papers 12-36, Bank of Canada.
    7. Taya Dumrongrittikul & Heather Anderson & Farshid Vahid, 2014. "The Effects of Productivity Gains in Asian Emerging Economies: A Global Perspective," Monash Econometrics and Business Statistics Working Papers 23/14, Monash University, Department of Econometrics and Business Statistics.
    8. Adam Traczyk, 2013. "Financial integration and the term structure of interest rates," Empirical Economics, Springer, vol. 45(3), pages 1267-1305, December.
    9. Bettendorf, Timo, 2016. "Spillover effects of credit default risk in the euro area and the effects on the euro: A GVAR approach," Discussion Papers 42/2016, Deutsche Bundesbank.
    10. repec:eee:anture:v:67:y:2017:i:c:p:1-13 is not listed on IDEAS
    11. Robert Anderton & Paul Hiebert, "undated". "The Impact of Globalisation on the Euro Area Macroeconomy," Discussion Papers 09/14, University of Nottingham, GEP.
    12. Britta Niehof, 2014. "Spillover Effects in Government Bond Spreads: Evidence from a GVAR Model," MAGKS Papers on Economics 201458, Philipps-Universit├Ąt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Balasan, Andrei-Cristian, 2012. "Literature review concerning the relationship between globalization and regionalization in the world economy," MPRA Paper 39746, University Library of Munich, Germany.
    14. INOUE Tomoo & OKIMOTO Tatsuyoshi, 2017. "Measuring the Effects of Commodity Price Shocks on Asian Economies," Discussion papers 17009, Research Institute of Economy, Trade and Industry (RIETI).
    15. Allegret, Jean-Pierre & Sallenave, Audrey, 2014. "The impact of real exchange rates adjustments on global imbalances: A multilateral approach," Economic Modelling, Elsevier, vol. 37(C), pages 149-163.
    16. Samargandi, Nahla & Kutan, Ali M., 2016. "Private credit spillovers and economic growth: Evidence from BRICS countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 56-84.
    17. Yan M Sun & Frigyes F Heinz & Giang Ho, 2013. "Cross-Country Linkages in Europe; A Global VAR Analysis," IMF Working Papers 13/194, International Monetary Fund.

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