Relationship between trade and employment in the industrial sector

Authors

1 Associate Professor, Faculty of Economics, Management and Accounting, Yazd University

2 Master of Science (Economics), Yazd University

Abstract

 
Many contemporary economists and policy makers believe that one of the effective strategies for development is improvement of access to benefits of trade liberalization. But the effect of this policy on other sectors must not be neglected. This paper examines the effects of trade liberalization on industrial employment. In fact employment is one of the challenges the government of I.R.I. faces and identification of factors that impact it can help resolve some of the main obstacles in solving in issue.
To evaluate the effect of trade liberalization on industrial employment this paper employs panel data methods and STATA software on data for the period of 1996 to 2010 for Iran. Similar to other studies in the literature we use the ratio of exports to value added, the ratio of imports to value added, and the sum of exports and imports to value added as metrics for trade liberalization. The results indicate a significantly negative impact of trade liberalization on industrial employment. R&D and advertisement expenditure as a proportion of non-industrial payment and construction payments as a proportion of the total payment have positive effect on employment

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References

-    Orbeta, C. A. (2002). Globalization and Employment: The Impact of Trade on Employment Level and Structure in the Philippines. Philippine Institute for Development Studies, Discussion Paper Series. No 2002-04.
-    Rama, M. (1994). The Labor Market and Trade Reform in Manufacturing. In: Connolly, M., de Melo, J. (Eds.). The Effects of Protectionism on a Small Country, The case of Uruguay, pp.108-123.
-    Revenga, A. (1997). Employment and Wage Effects of Trade Liberalization: the Case of Mexican Manufacturing. Journal of Labor Economics. Vol.15, No.3, pp.20-43.

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