IDEAS home Printed from https://ideas.repec.org/a/taf/intecj/v31y2017i2p245-296.html
   My bibliography  Save this article

Trade Competitiveness and Employment: Job Creation or Job Destruction

Author

Listed:
  • Abdul Rashid
  • Muhammad Akram

Abstract

This paper empirically examines the impact of fluctuations in international trade competitiveness on employment in the UK manufacturing sector over the period 1999–2010. We find statistically significant but economically small effects of a shock to international trade competitiveness on the level of employment. Our results show that the adjustment process in employment mainly works through job creation. We also find that compared to large firms, small firms contribute more toward job creation than job destruction. Our results that changes in GDP growth rate and average wages are significantly related to employment suggest that the UK labour market significantly responds to market forces. Finally, we find that the effect of changes in the real exchange rate on both job creation and job destruction differs between exporting and non-exporting firms.

Suggested Citation

  • Abdul Rashid & Muhammad Akram, 2017. "Trade Competitiveness and Employment: Job Creation or Job Destruction," International Economic Journal, Taylor & Francis Journals, vol. 31(2), pages 245-296, April.
    • Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:245-296
    DOI: 10.1080/10168737.2017.1315157
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10168737.2017.1315157
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10168737.2017.1315157?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jose Manuel Campa & Linda S. Goldberg, 2001. "Employment Versus Wage Adjustment And The U.S. Dollar," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 477-489, August.
    2. Knetter, Michael M, 1989. "Price Discrimination by U.S. and German Exporters," American Economic Review, American Economic Association, vol. 79(1), pages 198-210, March.
    3. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, vol. 15(3), pages 485-500, September.
    4. Charles Engel, 1999. "Accounting for U.S. Real Exchange Rate Changes," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 507-538, June.
    5. Giulia Faggio & Kjell G. Salvanes & John Van Reenen, 2010. "The evolution of inequality in productivity and wages: panel data evidence," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(6), pages 1919-1951, December.
    6. David Cobham, 2006. "The Overvaluation of Sterling Since 1996: How the Policy makers Responded and Why," Economic Journal, Royal Economic Society, vol. 116(512), pages 185-207, June.
    7. Moser, Christoph & Urban, Dieter & di Mauro, Beatrice Weder, 2010. "International competitiveness, job creation and job destruction--An establishment-level study of German job flows," Journal of International Economics, Elsevier, vol. 80(2), pages 302-317, March.
    8. Corsetti, Giancarlo & Dedola, Luca & Leduc, Sylvain, 2008. "High exchange-rate volatility and low pass-through," Journal of Monetary Economics, Elsevier, vol. 55(6), pages 1113-1128, September.
    9. Alexander Hijzen & Mauro Pisu & Richard Upward & Peter W. Wright, 2011. "Employment, job turnover, and trade in producer services: UK firm-level evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 1020-1043, August.
    10. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    11. Myint Moe Chit & Marian Rizov & Dirk Willenbockel, 2010. "Exchange Rate Volatility and Exports: New Empirical Evidence from the Emerging East Asian Economies," The World Economy, Wiley Blackwell, vol. 33(2), pages 239-263, February.
    12. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1243-1272, September.
    13. Claudia M. Buch & Iris Kesternich & Alexander Lipponer, 2009. "Financial Constraints and the Margins of FDI," IAW Discussion Papers 54, Institut für Angewandte Wirtschaftsforschung (IAW).
    14. Greenhalgh, Christine & Rogers, Mark, 2006. "The value of innovation: The interaction of competition, R&D and IP," Research Policy, Elsevier, vol. 35(4), pages 562-580, May.
    15. Gomez-Salvador, Ramon & Messina, Julian & Vallanti, Giovanna, 2004. "Gross job flows and institutions in Europe," Labour Economics, Elsevier, vol. 11(4), pages 469-485, August.
    16. Xiaming Liu & Pamela Siler & Chengqi Wang & Yingqi Wei, 2000. "Productivity Spillovers From Foreign Direct Investment: Evidence From UK Industry Level Panel Data," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(3), pages 407-425, September.
    17. Sourafel Girma & Holger Görg & Aoife Hanley, 2008. "R&D and Exporting: A Comparison of British and Irish Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 750-773, December.
    18. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "Job Creation, Job Destruction and the Role of Small Firms: Firm‐Level Evidence for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(5), pages 621-647, October.
    19. Mirko Draca & Stephen Machin & John Van Reenen, 2011. "Minimum Wages and Firm Profitability," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 129-151, January.
    20. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
    21. Presbitero, Andrea F., 2008. "The Debt-Growth Nexus in Poor Countries: A Reassessment," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-28.
    22. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    23. Campa, Jose Manuel & Gonzalez Minguez, Jose M., 2006. "Differences in exchange rate pass-through in the euro area," European Economic Review, Elsevier, vol. 50(1), pages 121-145, January.
    24. Raphael Auer & Thomas Chaney, 2009. "Exchange Rate Pass-Through in a Competitive Model of Pricing-to-Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(s1), pages 151-175, February.
    25. Gust, Christopher & Leduc, Sylvain & Vigfusson, Robert, 2010. "Trade integration, competition, and the decline in exchange-rate pass-through," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 309-324, April.
    26. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    27. Burgess, Simon M & Knetter, Michael M, 1998. "An International Comparison of Employment Adjustment to Exchange Rate Fluctuations," Review of International Economics, Wiley Blackwell, vol. 6(1), pages 151-163, February.
    28. John M. Abowd & Patrick Corbel & Francis Kramarz, 1999. "The Entry And Exit Of Workers And The Growth Of Employment: An Analysis Of French Establishments," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 170-187, May.
    29. Sarah Bridges & Alessandra Guariglia, 2008. "Financial Constraints, Global Engagement, And Firm Survival In The United Kingdom: Evidence From Micro Data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 444-464, September.
    30. repec:hal:spmain:info:hdl:2441/651f8db8eu86bpej8g9cb795ud is not listed on IDEAS
    31. repec:bla:scotjp:v:47:y:2000:i:3:p:213-50 is not listed on IDEAS
    32. Klein, Michael W. & Schuh, Scott & Triest, Robert K., 2003. "Job creation, job destruction, and the real exchange rate," Journal of International Economics, Elsevier, vol. 59(2), pages 239-265, March.
    33. Ana L. Revenga, 1992. "Exporting Jobs?The Impact of Import Competition on Employment and Wages in U. S. Manufacturing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 255-284.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elena Banica & Valentina Vasile, 2017. "Foreign trade impact on employment efficiency – an analysis using R," Romanian Statistical Review, Romanian Statistical Review, vol. 65(4), pages 111-127, December.
    2. Seema Narayan & Tri Tung Nguyen & Xuan-Hoa Nghiem, 2021. "Does Economic Integration Increase Female Labour Force Participation? Labour Force Participation?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(1), pages 1-34, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Moser, Christoph & Urban, Dieter & di Mauro, Beatrice Weder, 2010. "International competitiveness, job creation and job destruction--An establishment-level study of German job flows," Journal of International Economics, Elsevier, vol. 80(2), pages 302-317, March.
    2. Galindo, Arturo & Izquierdo, Alejandro & Montero, Jose Manuel, 2007. "Real exchange rates, dollarization and industrial employment in Latin America," Emerging Markets Review, Elsevier, vol. 8(4), pages 284-298, December.
    3. Italo Colantone, 2012. "Trade openness, real exchange rates and job reallocation: evidence from Belgium," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 669-706, December.
    4. Burstein, Ariel & Gopinath, Gita, 2014. "International Prices and Exchange Rates," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 391-451, Elsevier.
    5. Nucci, Francesco & Pozzolo, Alberto Franco, 2010. "The exchange rate, employment and hours: What firm-level data say," Journal of International Economics, Elsevier, vol. 82(2), pages 112-123, November.
    6. Demir, Firat, 2010. "Exchange Rate Volatility and Employment Growth in Developing Countries: Evidence from Turkey," World Development, Elsevier, vol. 38(8), pages 1127-1140, August.
    7. Hoekman & Bernard & Winters, L. Alan, 2005. "Trade and employment : stylized facts and research findings," Policy Research Working Paper Series 3676, The World Bank.
    8. Raphael A. Auer, 2015. "Exchange Rate Pass‐Through, Domestic Competition, and Inflation: Evidence from the 2005–08 Revaluation of the Renminbi," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1617-1650, December.
    9. Campbell, Douglas L., 2020. "Relative Prices and Hysteresis: Evidence from US Manufacturing," European Economic Review, Elsevier, vol. 129(C).
    10. Demir, Firat, 2013. "Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?," Journal of Development Economics, Elsevier, vol. 100(1), pages 74-88.
    11. Mai Dao & Ms. Ruo Chen, 2011. "The Real Exchange Rate and Employment in China," IMF Working Papers 2011/148, International Monetary Fund.
    12. Boris Kaiser & Michael Siegenthaler, 2016. "The Skill‐biased Effects of Exchange Rate Fluctuations," Economic Journal, Royal Economic Society, vol. 0(592), pages 756-780, May.
    13. Emi Nakamura & Jón Steinsson, 2012. "Lost in Transit: Product Replacement Bias and Pricing to Market," American Economic Review, American Economic Association, vol. 102(7), pages 3277-3316, December.
    14. Anubha Dhasmana, 2015. "Transmission of real exchange rate changes to the manufacturing sector: The role of financial access," International Economics, CEPII research center, issue 143, pages 48-69.
    15. Risheng Mao & John Whalley, 2011. "Ownership Characteristics, Real Exchange Rate Movements and Labor Market Adjustment in China," NBER Working Papers 17565, National Bureau of Economic Research, Inc.
    16. Mallick, Sushanta & Marques, Helena, 2016. "Pricing strategy of emerging market exporters in alternate currency regimes: The role of comparative advantage," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 68-81.
    17. Anubha Dhasmana, 2021. "Employment growth in the face of exchange rate uncertainty: The role of trade and foreign equity finance," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 79-117, July.
    18. Campbell, Douglas L. & Lusher, Lester, 2019. "The impact of real exchange rate shocks on manufacturing workers: An autopsy from the MORG," Journal of International Money and Finance, Elsevier, vol. 91(C), pages 12-28.
    19. Antonia López-Villavicencio & Valérie Mignon, 2020. "Exchange rate pass-through to import prices: accounting for changes in the eurozone trade structure," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 835-858, November.
    20. Francesco Nucci & Alberto Franco Pozzolo, 2014. "Exchange Rate, External Orientation of Firms and Wage Adjustment," The World Economy, Wiley Blackwell, vol. 37(11), pages 1589-1611, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:245-296. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RIEJ20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.