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Trade Competitiveness and Employment: Job Creation or Job Destruction

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  • 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
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. Claudia M. Buch & Iris Kesternich & Alexander Lipponer, 2009. "Financial Constraints and the Margins of FDI," IAW Discussion Papers 54, Institut für Angewandte Wirtschaftsforschung (IAW).
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    Cited by:

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    2. 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.

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