Free Trade Agreement (FTA) and Employment

Sumit Chowdhury, Sugata Marjit and Gouranga Das

No 11657, CESifo Working Paper Series from CESifo

Abstract: While FTA negotiations are proliferating, our paper shows that targeting the appropriate sector is crucial for generating employment opportunities subsequent to FTA. In particular, we show that, countering conventional wisdom, targeting skill-biased exports and not the sector that employs unskilled workers who usually constitute the large core of the unemployed, could ameliorate the unemployment problem. The mechanism hinges on how the demand for goods produced by the non-traded sector is stimulated by such a policy. If targeting the skilled sector with an FTA can stimulate local demand more, employment impact of FTA may be more significant.

Keywords: FTA; minimum wage; demand effect; non-tradable; employment; elasticity of substitution; factor-intensity (search for similar items in EconPapers)
JEL-codes: C52 D50 F16 J21 J31 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-int and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11657

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