How does a decrease in global trade affect unemployment?

When trade costs are reduced, the demand for labor in the export industry increases. The aggregate unemployment rate may increase or decrease depending on whether the export sector has a higher or lower unemployment rate than the sector that competes with imports. Suppose that initially the free trade price of textiles is given by P1 in Figure 9.1.Unemployment in the import market of a small country. Therefore, the article adds to the growing literature on whether international trade is a major cause of the increase in wage and unemployment gaps between skilled and unskilled labor that has been observed in the United States and some other countries since the 1980s.

Note 1 However, in the public eye, international trade involves the danger of destroying jobs, particularly through increased imports. Linear regressions of the employment situation on commercial variables and individual characteristics, regression coefficients. However, it has been confirmed that individual characteristics, such as short term of office, part-time employment and low qualifications, are important factors that positively influence a person's risk of becoming unemployed. From the following list of policy options, identify all types of trade policies and all types of domestic policies that could increase national well-being in the presence of every imperfection.

Other studies, such as Sheldon (200), Puhani (200) and Arvanitis (200), analyze changes in supply and demand in the Swiss labor market, but do not explicitly investigate the effects of trade. If this is the case, international trade could be one of the reasons for the increase in the relative unemployment rate of low-skilled labor described in the “Background” section. The intuition is that trade increases productivity, which increases the search effort of employees and employers, which, in turn, reduces unemployment. If free trade were maintained in the face of increased imports, unemployment and its associated costs would be incurred, but these costs are likely to be temporary.

Given the firm, albeit uninterrupted, trend in the relative unemployment rate in Switzerland, it is extremely interesting to assess whether trade can be a driving force behind these developments. Keep in mind that, in general, the coefficients of the characteristics of the workers and the position do not change qualitatively in these different specifications, nor do the GAV and TIC coefficients (except in the case of the low level of qualification as a result of their interaction with commercial variables).

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