Trade and Unemployment in Germany: An Empirical Exploration and Some Theory
This paper investigates the link between unemployment and external trade in Germany, using data on unemployment, international trade and economic activity for the 16 German federal states (Länder). With panel data econometrics we show that international trade as measured by state-wise trade shares have a significant negative impact on state-wise unemployment rates. We discuss to what extent this reflects mercantilist tendencies embedded in the political economy of the Federal Republic. There is no clear evidence in favor of simple mercantilism. We suggest three alternative explanations, linked to the structural rigidities of the German labor market, government involvement in the education and training system and certain labor market policies which provide government-subsidized unemployment insurance benefitting (mainly) export industries.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maurice J.G. Bun & Jan F. Kiviet, 2002.
"On the Diminishing Returns of Higher-order Terms in Asymptotic Expansions of Bias,"
Tinbergen Institute Discussion Papers
02-099/4, Tinbergen Institute, revised 24 Oct 2002.
- Bun, Maurice J. G. & Kiviet, Jan F., 2003. "On the diminishing returns of higher-order terms in asymptotic expansions of bias," Economics Letters, Elsevier, vol. 79(2), pages 145-152, May.
- Kiviet, Jan F., 1995.
"On bias, inconsistency, and efficiency of various estimators in dynamic panel data models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 53-78, July.
- Tom Doan, . "LSDVC: RATS procedure to estimate a dynamic FE model with correction for bias," Statistical Software Components RTS00111, Boston College Department of Economics.
- Hans-Werner Sinn, 2005. "Basar-Ökonomie Deutschland - Exportweltmeister oder Schusslicht?," Ifo Schnelldienst, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(06), pages 03-42, 03.
- Blundell, R. & Bond, S., 1995.
"Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,"
104, Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Marc J. Melitz, 2003.
"The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity,"
Econometric Society, vol. 71(6), pages 1695-1725, November.
- Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
- Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
- Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
- Sergio Cesaratto, 2010. "Europe, German Mercantilism and the Current Crisis," Department of Economics University of Siena 595, Department of Economics, University of Siena.
- Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
When requesting a correction, please mention this item's handle: RePEc:hlj:hljwrp:24-2011. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Fahrholz)
If references are entirely missing, you can add them using this form.