Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries

Gabriel Bruneau and Kevin Moran

CIRANO Working Papers from CIRANO

Abstract: We estimate the impact of exchange rate fluctuations and other external factors on hours worked and employment in Canada's manufacturing industries. The analysis is based on a dynamic model of labour demand and the econometric strategy employs a dynamic OLS approach for cointegrating regressions. Our data is drawn from a panel of 20 manufacturing industries, from Statistics Canada's KLEMS database, and covers a long sample that includes two full cycles of appreciation and depreciation in the value of the Canadian dollar. We find that exchange rate fluctuations have economically and statistically significant effects on the labour choices of Canada's manufacturing employers, and that these effects are stronger for industries more exposed to trade. In addition, we find that the enactment of NAFTA in 1994 has had a negative impact on labour in manufacturing industries. Finally, we report that employment reacts faster than total hours worked, suggesting that hours worked per employee react in a countercyclical fashion to exchange rate fluctuations.

Keywords: exchange rate fluctuations; manufacturing employment; panel data estimation; cointegrating regression (search for similar items in EconPapers)
Date: 2012-06-01
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (2)

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https://cirano.qc.ca/files/publications/2012s-19.pdf

Related works:
Journal Article: Exchange rate fluctuations and labour market adjustments in Canadian manufacturing industries (2017)
Journal Article: Exchange rate fluctuations and labour market adjustments in Canadian manufacturing industries (2017)
Working Paper: Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries (2015)
Working Paper: Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2012s-19

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