Trade and labor market dynamics: What do we learn from the data?

Daniela Nordmeier, Hans-Jörg Schmerer and Enzo Weber

Economics Letters, 2016, vol. 145, issue C, 206-209

Abstract: Recent studies in international trade highlight potential labor market effects of trade liberalization through firm selection. Our empirical study contributes to this recent strand of literature by studying the short- and long-run effects of trade on unemployment in Germany. We employ a structural VAR approach in order to disentangle the total effect of trade on unemployment into job-findings and separations. Our results indicate that the unemployment effect mainly works through a drop in the job-separation rate, which can be explained by job-to-job transitions from contracting towards expanding firms. Thus, our results reinforce the importance of endogenous separations and on-the-job search in models of trade, heterogeneous firms and labor market frictions.

Keywords: Exports; Worker flows; Transition rates; Cointegrated SVAR model (search for similar items in EconPapers)
JEL-codes: F1 J6 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:145:y:2016:i:c:p:206-209

DOI: 10.1016/j.econlet.2016.06.007

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