IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/89731.html
   My bibliography  Save this paper

Explaining the Employment Effect of Exports: Value-Added Content Matters

Author

Listed:
  • Sasahara, Akira

Abstract

This paper estimates and decomposes the impact of export opportunities on countries’ employment by using a global input-output analysis, focusing on the U.S., China, and Japan. The greater they export, the greater employment in the exporting countries. However, we first document that the number of jobs created per exports varies substantially across destination countries. We find that exports from sectors with higher domestic value-added contents such as natural resource, textile, and service sectors lead to a greater employment effect. As a result, cross-country differences in sectoral compositions of exports explain a large part of the variations in the employment effects across destination countries. Time series changes in the employment effect of exports come from changes in (1) the labor-to-output ratio, (2) input-output linkages, and (3) sectoral compositions in exports. Results suggest that the first channel worked to reduce the employment effect in all of the three countries we focused but the directions of the last two channels are different across the countries.

Suggested Citation

  • Sasahara, Akira, 2018. "Explaining the Employment Effect of Exports: Value-Added Content Matters," MPRA Paper 89731, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:89731
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/89731/1/MPRA_paper_89731.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Feng, Ling & Li, Zhiyuan & Swenson, Deborah L., 2016. "The connection between imported intermediate inputs and exports: Evidence from Chinese firms," Journal of International Economics, Elsevier, vol. 101(C), pages 86-101.
    2. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    3. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    4. Fukunari Kimura & Ayako Obashi, 2011. "Production Networks in East Asia : What We Know So Far," Microeconomics Working Papers 23216, East Asian Bureau of Economic Research.
    5. Tadashi Ito & Lorenzo Rotunno & Pierre-Louis Vézina, 2017. "Heckscher–Ohlin: Evidence from Virtual Trade in Value Added," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 427-446, August.
    6. Baldwin, Richard, 2012. "Global supply chains: Why they emerged, why they matter, and where they are going," CEPR Discussion Papers 9103, C.E.P.R. Discussion Papers.
    7. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness," Economic Policy, CEPR;CES;MSH, vol. 28(76), pages 613-661, October.
    8. Ito, Tadashi & Vézina, Pierre-Louis, 2016. "Production fragmentation, upstreamness, and value added: Evidence from Factory Asia 1990–2005," Journal of the Japanese and International Economies, Elsevier, vol. 42(C), pages 1-9.
    9. Kozo Kiyota, 2016. "Exports and Employment in China, Indonesia, Japan, and Korea," Asian Economic Papers, MIT Press, vol. 15(1), pages 57-72, Winter/Sp.
    10. repec:bla:reviec:v:26:y:2018:i:5:p:1053-1083 is not listed on IDEAS
    11. Hiau Looi Kee & Heiwai Tang, 2016. "Domestic Value Added in Exports: Theory and Firm Evidence from China," American Economic Review, American Economic Association, vol. 106(6), pages 1402-1436, June.
    12. repec:wbk:wbpubs:26447 is not listed on IDEAS
    13. Hiau Looi Kee & Heiwai Tang, 2015. "Domestic Value Added in Exports: Theory and Firm Evidence from China," CESifo Working Paper Series 5614, CESifo Group Munich.
    14. repec:aea:aejmac:v:9:y:2017:i:4:p:45-90 is not listed on IDEAS
    15. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    16. Chen, Xikang & Cheng, Leonard K. & Fung, K.C. & Lau, Lawrence J. & Sung, Yun-Wing & Zhu, K. & Yang, C. & Pei, J. & Duan, Y., 2012. "Domestic value added and employment generated by Chinese exports: A quantitative estimation," China Economic Review, Elsevier, vol. 23(4), pages 850-864.
    17. Robert C. Johnson, 2014. "Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 119-142, Spring.
    18. Robert C. Feenstra & Akira Sasahara, 2018. "The ‘China shock,’ exports and U.S. employment: A global input–output analysis," Review of International Economics, Wiley Blackwell, vol. 26(5), pages 1053-1083, November.
    19. Ayako Obashi & Fukunari Kimura, 2017. "Deepening and Widening of Production Networks in ASEAN," Asian Economic Papers, MIT Press, vol. 16(1), pages 1-27, Winter/Sp.
    20. Ildikó Magyari, 2017. "Firm Reorganization, Chinese Imports, and US Manufacturing Employment," Working Papers 17-58, Center for Economic Studies, U.S. Census Bureau.
    21. Okubo, Toshihiro & Kimura, Fukunari & Teshima, Nozomu, 2014. "Asian fragmentation in the Global Financial Crisis," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 114-127.
    22. repec:wly:emetrp:v:87:y:2019:i:3:p:741-835 is not listed on IDEAS
    23. Rudolfs Bems & Robert C. Johnson, 2017. "Demand for Value Added and Value-Added Exchange Rates," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 45-90, October.
    24. Lorenzo Caliendo & Maximiliano Dvorkin & Fernando Parro, 2019. "Trade and Labor Market Dynamics: General Equilibrium Analysis of the China Trade Shock," Econometrica, Econometric Society, vol. 87(3), pages 741-835, May.
    25. Marcel P. Timmer & Abdul Azeez Erumban & Bart Los & Robert Stehrer & Gaaitzen J. de Vries, 2014. "Slicing Up Global Value Chains," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 99-118, Spring.
    26. repec:eee:eecrev:v:101:y:2018:i:c:p:479-504 is not listed on IDEAS
    27. Duval, Romain & Li, Nan & Saraf, Richa & Seneviratne, Dulani, 2016. "Value-added trade and business cycle synchronization," Journal of International Economics, Elsevier, vol. 99(C), pages 251-262.
    28. Los, Bart & Timmer, Marcel P. & de Vries, Gaaitzen J., 2015. "How important are exports for job growth in China? A demand side analysis," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 19-32.
    29. Koopman, Robert & Wang, Zhi & Wei, Shang-Jin, 2012. "Estimating domestic content in exports when processing trade is pervasive," Journal of Development Economics, Elsevier, vol. 99(1), pages 178-189.
    30. repec:era:eriabk:routledge-eria-03 is not listed on IDEAS
    31. Bart Los & Marcel P. Timmer & Gaaitzen J. Vries, 2015. "How Global Are Global Value Chains? A New Approach To Measure International Fragmentation," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 66-92, January.
    32. Shen, Leilei & Silva, Peri, 2018. "Value-added exports and U.S. local labor markets: Does China really matter?," European Economic Review, Elsevier, vol. 101(C), pages 479-504.
    33. Vianna, Andre C., 2016. "The impact of exports to China on Latin American growth," Journal of Asian Economics, Elsevier, vol. 47(C), pages 58-66.
    34. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    35. Ma, Hong & Wang, Zhi & Zhu, Kunfu, 2015. "Domestic content in China’s exports and its distribution by firm ownership," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 3-18.
    36. Bart Los & Marcel P. Timmer & Gaaitzen J. de Vries, 2016. "Tracing Value-Added and Double Counting in Gross Exports: Comment," American Economic Review, American Economic Association, vol. 106(7), pages 1958-1966, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Exports; Employment; Global Input-Output Table; Value-Added Content of Trade;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:89731. 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: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.