How an Export Boom affects Unemployment

Noel Gaston and Gulasekaran Rajaguru ()

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: Does trade affect the equilibrium rate of unemployment? To theoretically examine this question, we incorporate firm-union bargaining considerations into a model with a booming external sector and a stagnating manufacturing sector. In the model, a sustained improvement in the terms of trade lowers unemployment. To empirically investigate the predicted determinants of the unemployment rate, we use data for Australia, a country whose prosperity has always depended on the value of its exports. We find strong evidence that higher export prices, capital accumulation in tradeable goods industries and a lower unemployment benefit replacement rate each reduce the equilibrium

Date: 2011-01
New Economics Papers: this item is included in nep-int and nep-lab
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Citations: View citations in EconPapers (4)

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Journal Article: How an export boom affects unemployment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0801

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