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Does the structure of employment affect the external imbalances? Theory and evidence

Giray Gözgör ()

Structural Change and Economic Dynamics, 2018, vol. 45, issue C, 77-83

Abstract: This paper theoretically constructs a simple model to study the effect of the structure of employment on the external trade balance. The paper illustrates that when the share of employment in services increases, the external trade deficit also increases, and this occurs due to the direct effect of the income and the indirect effect of the productivity. Empirically, the paper analyzes the effects of the structure of employment upon the external balance of goods and services in the panel dataset of 137 developing and developed countries for the period from 1960 to 2011. The paper finds that the external trade deficit has been rising with a higher share of the employment in services.

Keywords: External trade balance; The structure of employment; Deindustrialization; Outcomes of globalization (search for similar items in EconPapers)
JEL-codes: F16 F32 E24 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:streco:v:45:y:2018:i:c:p:77-83