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Free Trade Agreement (FTA) and Employment

Author

Listed:
  • Sumit Chowdhury
  • Sugata Marjit
  • Gouranga Das

Abstract

While FTA negotiations are proliferating, our paper shows that targeting the appropriate sector is crucial for generating employment opportunities subsequent to FTA. In particular, we show that, countering conventional wisdom, targeting skill-biased exports and not the sector that employs unskilled workers who usually constitute the large core of the unemployed, could ameliorate the unemployment problem. The mechanism hinges on how the demand for goods produced by the non-traded sector is stimulated by such a policy. If targeting the skilled sector with an FTA can stimulate local demand more, employment impact of FTA may be more significant.

Suggested Citation

  • Sumit Chowdhury & Sugata Marjit & Gouranga Das, 2025. "Free Trade Agreement (FTA) and Employment," CESifo Working Paper Series 11657, CESifo.
    • Handle: RePEc:ces:ceswps:_11657
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    FTA; minimum wage; demand effect; non-tradable; employment; elasticity of substitution; factor-intensity;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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