International trade and unemployment: evidence from selected Arab countries

Atif Awad and Ishak Yussof

Middle East Development Journal, 2016, vol. 8, issue 2, 198-229

Abstract: Empirical studies examining whether exposure to international trade creates or destroys jobs produce inconclusive findings. The present study seeks to examine the impact of international trade policies on unemployment for 10 Arab countries over the period of 1991–2012 using a theoretical framework incorporating trade and search-generated unemployment. In addition to the trade policy measurements, the present study controls for variables that represent macroeconomic policies; demographic change (population); governance, institutional quality and labour market regulation. Using different proxies for trade policies, the results of the Pooled Mean Group (PMG) show that trade liberalization policies have a positive impact on unemployment in the long run, but a negative impact in the short run. The finding supports contemporary calls to participate in international trade to facilitate job creation. However, further studies are required to identify the specific channels through which trade policies can affect unemployment in the Arab region.

Date: 2016
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DOI: 10.1080/17938120.2016.1226466

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