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The Effects of Trade on Unemployment: Evidence from 20 OECD countries

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  • Kim, Jaewon

    () (Dept. of Economics, Stockholm University)

Abstract

This study empirically investigates if international trade has an impact on aggregate unemployment in the presence of labour market institutions. Using data for twenty OECD countries for the years 1961-2008, this study finds that an increase in trade leads to higher aggregate unemployment as it interacts with rigid labour market institutions, whereas it may reduce aggregate unemployment if the labour market is characterised by flexibility. In a country with the average degree of the labour market rigidities, an increase in trade has no significant effect on unemployment rates.

Suggested Citation

  • Kim, Jaewon, 2011. "The Effects of Trade on Unemployment: Evidence from 20 OECD countries," Research Papers in Economics 2011:19, Stockholm University, Department of Economics.
  • Handle: RePEc:hhs:sunrpe:2011_0019
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    File URL: http://www2.ne.su.se/paper/wp11_19.pdf
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    Cited by:

    1. Ignat Stepanok, 2016. "Creative destruction and unemployment in an open economy model," Canadian Journal of Economics, Canadian Economics Association, vol. 49(3), pages 931-948, August.

    More about this item

    Keywords

    Unemployment; Trade; Labour market institutions; Panel-data analysis; Instrument;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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