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The impact of trade openness on the unemployment rate in G7 countries

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  • Giray Gozgor

Abstract

Recent and ongoing literature strongly implies the existence of a significant and robust impact of trade openness (liberalisation) and globalisation on unemployment, particularly in developed economies. This paper empirically investigates the impacts of four different measures of trade openness and globalisation on the unemployment rate in an unbalanced panel framework. The analysis focuses on the G7 countries: Canada, France, Germany, Italy, Japan, the United Kingdom (UK), and the United States (US). Robust empirical findings from panel data estimates demonstrate that, along with macroeconomic indicators and market size, all the measures of trade openness and globalisation are significantly and negatively associated with the unemployment rate. Therefore, we conclude that the continuation of the globalisation process instead of protectionism is of great importance in reducing the unemployment rate in developed economies.

Suggested Citation

  • Giray Gozgor, 2014. "The impact of trade openness on the unemployment rate in G7 countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(7), pages 1018-1037, October.
    • Handle: RePEc:taf:jitecd:v:23:y:2014:i:7:p:1018-1037
    DOI: 10.1080/09638199.2013.827233
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    References listed on IDEAS

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    1. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
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    Cited by:

    1. Adejumo, Oluwabunmi O. & Asongu, Simplice A. & Adejumo, Akintoye V., 2021. "Education enrolment rate vs employment rate: Implications for sustainable human capital development in Nigeria," International Journal of Educational Development, Elsevier, vol. 83(C).
    2. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Trade Openness and Employment Nexus in Saudi Arabia," MPRA Paper 109451, University Library of Munich, Germany.
    3. Nazia Anjum & Zahid Perviz, 2016. "Effect of Trade Openness on Unemployment in Case of Labour and Capital Abundant Countries," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 5(1), pages 44-58, March.
    4. Sanjeev Kumar & Falguni Pattanaik & Ajay K. Singh, 2021. "Modeling Trade–Employment Elasticity Nexus: Evidence from India," Emerging Economy Studies, International Management Institute, vol. 7(1), pages 62-75, May.
    5. Lukas Mohler & Rolf Weder & Simone Wyss, 2018. "International trade and unemployment: towards an investigation of the Swiss case," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-12, December.
    6. Isaev, Mirolim & Masih, Mansur, 2017. "The nexus of private sector foreign debt, unemployment, trade openness: evidence from Australia," MPRA Paper 79423, University Library of Munich, Germany.
    7. Giray Gozgor, 2017. "The Impact of Globalization on the Structural Unemployment: An Empirical Reappraisal," International Economic Journal, Taylor & Francis Journals, vol. 31(4), pages 471-489, October.
    8. Taleb Awad-Warrad, 2018. "Trade Openness, Economic Growth and Unemployment Reduction in Arab Region," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 179-183.
    9. Judzik, Dario, 2014. "Heterogeneous labor demand: sectoral elasticity and trade effects in the U.S., Germany and Sweden," MPRA Paper 62768, University Library of Munich, Germany.
    10. Antonia Lòpez-Villavicencio & Luis Antonio Reyes Ortiz, 2018. "Is globalisation taking away jobs? An empirical assessment for advanced economies," CEPN Working Papers halshs-01895223, HAL.
    11. Giray Gozgor & Muhlis Can, 2016. "Effects of the product diversification of exports on income at different stages of economic development," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 215-235, August.
    12. Koffi Kpognon & Henri Atangana Ondoa & Mamadou Bah & Marie Fanny Messe, 2020. "Ouverture commerciale, institutions du marché du travail et emploi des jeunes en Afrique," African Development Review, African Development Bank, vol. 32(S1), pages 91-105, November.
    13. Antonia Lòpez-Villavicencio & Luis Antonio Reyes Ortiz, 2018. "Is globalisation taking away jobs? An empirical assessment for advanced economies," Working Papers halshs-01895223, HAL.

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