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Jobs gained and lost through trade: The case of Germany

  • Lurweg, Maren
  • Westermeier, Andreas
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    The nature of international trade has changed significantly. For centuries, trade concentrated on the exchange of finished goods. It now increasingly involves bits of value that are added at different locations to combine into one final product. Therefore, trade in functions or tasks are of growing importance and exports of final goods are no longer an appropriate indicator of the international competitiveness of countries. The process of globalisation has an impact on domestic labour markets. Due to the increasing integration of the world economy, some jobs are gained and others lost in any open economy. Concerns about German workers losing jobs to foreign competition dominate many political debates. Many people fear that being integrated in the world economy is disadvantageous for Germany. In this paper, we use input-output analysis to explore the relationship between trade and both job creation and job destruction in Germany over the period 1995-2006. We present two main findings. First, in an autarkic situation, around 7.0 per cent of total German jobs would not have existed at all in 2006. The job effect of trade was positive in every reporting year. Second, the manufacturing sector contributed most to this positive job effect, but also in the service sector, many jobs were retained through trade.

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    File URL: http://econstor.eu/bitstream/10419/41580/1/622413945.pdf
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    Paper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 95.

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    Date of creation: 2010
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    Handle: RePEc:zbw:cegedp:95
    Contact details of provider: Postal: Platz der Göttinger Sieben 3, 37073 Göttingen
    Web page: http://www.cege.wiso.uni-goettingen.de/

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    1. Danièle Meulders & François Rycx & Robert Plasman, 2004. "Minimum Wages, low pay and unemployment: introduction," ULB Institutional Repository 2013/7704, ULB -- Universite Libre de Bruxelles.
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    7. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
    8. Mary Amiti & Shang-Jin Wei, 2004. "Fear of Service Outsourcing; Is it Justified?," IMF Working Papers 04/186, International Monetary Fund.
    9. Falk, Martin & Wolfmayr, Yvonne, 2008. "Services and materials outsourcing to low-wage countries and employment: Empirical evidence from EU countries," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 38-52, March.
    10. Erica L. Groshen & Bart Hobijn & Margaret M. McConnell, 2005. "U.S. jobs gained and lost through trade: a net measure," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 11(Aug).
    11. Alexander Hijzen & Holger Görg & Robert C. Hine, 2005. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Economic Journal, Royal Economic Society, vol. 115(506), pages 860-878, October.
    12. Kowalewski, Julia, 2009. "Methodology of the input-output analysis," HWWI Research Papers 1-25, Hamburg Institute of International Economics (HWWI).
    13. Hoekman & Bernard & Winters, L. Alan, 2005. "Trade and employment : stylized facts and research findings," Policy Research Working Paper Series 3676, The World Bank.
    14. Koen De Backer & Norihiko Yamano, 2007. "The Measurement of Globalisation using International Input-Output Tables," OECD Science, Technology and Industry Working Papers 2007/8, OECD Publishing.
    15. Martin Falk & Yvonne Wolfmayr, 2005. "Employment Effects of Outsourcing to Low Wage Countries. Empirical Evidence for EU Countries," WIFO Working Papers 262, WIFO.
    16. Danièle Meulders & Robert Plasman & François Rycx, 2004. "Minimum wages, low pay and unemployment," ULB Institutional Repository 2013/7740, ULB -- Universite Libre de Bruxelles.
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