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Does the structure of employment affect the external imbalances? Theory and evidence

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  • Gozgor, Giray

Abstract

This paper theoretically constructs a simple model to study the effect of the structure of employment on the external trade balance. The paper illustrates that when the share of employment in services increases, the external trade deficit also increases, and this occurs due to the direct effect of the income and the indirect effect of the productivity. Empirically, the paper analyzes the effects of the structure of employment upon the external balance of goods and services in the panel dataset of 137 developing and developed countries for the period from 1960 to 2011. The paper finds that the external trade deficit has been rising with a higher share of the employment in services.

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  • Gozgor, Giray, 2018. "Does the structure of employment affect the external imbalances? Theory and evidence," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 77-83.
    • Handle: RePEc:eee:streco:v:45:y:2018:i:c:p:77-83
    DOI: 10.1016/j.strueco.2018.02.004
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    More about this item

    Keywords

    External trade balance; The structure of employment; Deindustrialization; Outcomes of globalization;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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