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Can export promotion reduce unemployment?

Marcelo Olarreaga and Cristian Ugarte

No 15049, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper examines the impact of export promotion on aggregate unemployment. We findnd that increases in the share of Export Promotion Agencies' (EPAs) budgets on total exports lead to small decreases in aggregate unemployment. This effect is amplifi ed when export promotion efforts are concentrated in sectors in which the country has a comparative advantage. On the other hand, when EPAs aim at reducing aggregate unemployment by focusing their efforts in sectors with high levels of unemployment, then aggregate unemployment increases. These results suggest that even if EPAs' pri- orities were to shift towards reducing unemployment, this would be better addressed by focusing on sectors in which the country has a comparative advantage rather than sectors with high labor market frictions.

Keywords: Export promotion; Unemployment; Comparative advantage (search for similar items in EconPapers)
JEL-codes: F13 F14 O19 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-int
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