Real exchange rate changes and employment in emerging economies: Sectorial analysis

Nabil Alimi

Japanese Economy, 2025, vol. 51, issue 1-2, 233-251

Abstract: This study attempts to assess the reaction of sectorial employment shares to real exchange rate (RER) changes in 19 emerging economies over the period 1992–2020. To this end, a panel autoregressive distributed lag (ARDL) model was used. First, our findings reveal that the effects of RER changes on sectorial employment shares are neutral in the short run and significant in the long run. Second, this effect differs between sectors; whereas undervalued currencies boost employment in agriculture and services sectors, they hamper it in industry sectors, and vice versa. These results could be very helpful for governments that need to know in advance the effect of RER’s adjustments on the employment market, especially when they decide to tackle unemployment via this tool.

Date: 2025
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DOI: 10.1080/2329194X.2025.2469262

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