Trade in Jobs: a counterfactual exercise Robert Stehrer & Roman - PowerPoint PPT Presentation

1 Trade in Jobs: a counterfactual exercise Robert Stehrer & Roman Stöllinger The Vienna Institute for International Economic Studies (wiiw), Austria WIOD Conference: Causes and Consequences of Globalization April 24 th -26th, 2012 – Groningen The WIOD-project is funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities, Grant Agreement no: 225 281.

2 Research question  What is the net employment resulting from countries’ various engagements in international trade at the level of occupations?  Objective to take into account both exports and imports  Inspired by the offshoring and trade-in-tasks literature  wiiw

3 Related Literature  Trefler and Zhu (2010)  Provide a definition of the factor content of trade that takes into account (i) productivity differences across countries and (ii) trade in intermediates  Goos, Manning and Salomons (2011)  Analyse the effects of technological change and offshoring on the labour demand at the level of occupations. Both are found to be related to the job polarization in Europe  Groshen, Hobijn and McConnell (2005); De Backer and Yamano (2008)  Counterfactual calculations for the “job embodiment of international trade” for the US and OECD countries  wiiw respectively

4 Methodological Approach (1)  Input-Output based approach to calculate the ‘job embodiment of international trade’  Intuitively, the job embodiment of international trade compares the number of jobs required to produce the export vector with the hypothetical number of jobs that would be required to produce the import vector domestically using domestic labour productivity.   wiiw

5 Methodological Approach (2)   wiiw

6 Data  Input-Output data : World Input-Output Table (WIOT)  40 countries (incl. EU27) + Rest of the World  35 industries (NACE classification)  Time period: 1995-2009  Employment data : from (i) European Labour Force Survey (LFS) and (ii) WIOD Socio-Economic Accounts  27 occupations according to International Standard Classification of Occupations (ISCO) at the 2-digit level  Time period: 1995-2008  wiiw

7 Features and caveats of the counterfactual exercise  Attempt to provide a balanced approach the various forms of both export and import flows  Fixed input and factor requirements; neglecting the quality dimension  Assumes away non-competing imports and potential ‘technological incapability’ to produce all imported goods  Technology is the same for domestic production and for exports (problem for enclave economies)  wiiw

8 Results – Pattern across Occupations  wiiw

9 International trade goes along with a skill upgrading for the EU economy… Job embodiment of international trade by occupational categories EU27, in thousands (ISCO-1 digit)  wiiw

10 …and a ‘nuanced’ form of job polarization Job embodiment of international trade by occupational categories EU27, in thousands (ISCO-2 digit)  wiiw

11 Results – Overall employment  wiiw

12 US ‘loses’ from trade in terms of jobs… …Asia is gaining big time Job embodiment of international trade, 1995-2009, in thousands Number of job losses (-) and job gains (+) 1995 2000 2005 2006 2007 2008 2009 EU27 2,483 - 512 378 - 381 - 616 - 1,027 1,051 EU15 1,681 95 558 187 393 228 420 EU12 803 - 606 - 180 - 568 - 1,009 - 1,256 630 NAFTA - 1,680 - 5,828 - 9,523 - 10,431 - 10,490 - 11,213 - 9,014 USA - 2,049 - 5,594 - 8,235 - 8,580 - 8,023 - 7,665 - 6,425 ASIA 67,759 81,341 115,278 131,469 127,639 143,534 115,921 JPN 121 499 347 322 514 138 - 383 CHN 51,723 52,131 94,293 106,943 106,200 129,915 113,165 IND 14,217 23,150 15,948 19,669 16,979 12,265 207 OTHER DEVELOPED 29 - 31 - 384 - 430 - 571 - 361 - 531 OTHER EMERGING - 6,335 3,555 2,736 746 - 4,181 - 6,845 - 6,660 WIOD 40 62,257 78,524 108,484 120,973 111,781 124,089 100,766  wiiw

13 EU with small job gains in most years… …losses for new member states Job embodiment of international trade for the EU, 1995-2009 Share of job losses (-) and job gains (+) in % of total employment  wiiw

14 The trade balance matters for trade induced employment effects Trade balance position and job effects in the EU27 (in millions), 1995-2009 4 job embodiment of international trade 2 ITA ITA ITA ITA FRA POL FRA ITA ITA ITA FRA NLD ITA ITA FRA NLD POL ITA CZE FRA FRA NLD NLD NLD CZE NLD NLD NLD NLD FRA ITA ITA POL CZE CZE FRA FRA NLD ITA CZE POL NLD POL BEL NLD NLD NLD ITA FRA BEL NLD BEL BEL BEL ITA CZE BEL BEL BEL BEL POL POL BGR BEL BEL BEL POL BGR BEL SWE SWE SWE SWE CZE SWE SWE SWE BEL SWE BEL SWE SWE CZE CZE FRA SWE SWE SWE SWE SWE CZE CZE FRA POL CZE BGR HUN FIN FIN FIN FIN POL POL CZE BGR IRL FIN FIN IRL FIN FIN IRL IRL IRL IRL FRA POL HUN DNK DNK DNK DNK FIN FIN AUT DNK IRL AUT AUT IRL IRL FRA CZE BGR HUN HUN BGR SVK SVK HUN AUT DNK DNK FIN DNK IRL FIN DNK FIN DNK IRL IRL FIN IRL IRL HUN HUN SVK SVK DNK FIN AUT AUT DNK AUT LUX DNK DNK GBR IRL FRA CZE HUN HUN LTU LUX LTULUX HUN SVK BGR BGR EST EST SVK SVK SVN SVK SVK EST SVK AUT LUX DNK LUX LUX 0 POL HUN HUN BGR EST EST MLT EST SVK SVN SVN SVN LVA SVN MLT MLT SVN EST MLT SVN EST SVN LUX LUX LUX LUX LUX LUX LUX LUX HUN HUN BGR EST SVK EST SVK SVN MLT MLT MLT MLT SVN MLT MLT SVN EST MLT MLT MLT MLT SVN SVN MLT SVN LVA AUT LUX HUN SVN SVK EST BGR EST LVA LVA LVA LTU LVA LVA AUT GBR CYP CYP BGR CYP CYP CYP CYP CYP CYP SVK CYP CYP CYP CYP CYP LTU LTU LTU LTU LVA LTU LTU LVA AUT AUT GBR CYP CYP ROU AUT LVA LTU EST ESP EST BGR LTU LVA LTU ROU LVA LTU LVA PRTROU AUT LTU AUT LTU ESP POL LVA LVA ROU PRT POL BGR PRT GBR ESP BGR ROU ESP PRT PRT ROU PRT PRT ROU PRT ROU GBR PRT PRT PRT PRT PRT PRT ROU PRT ESP GRC ROU GBR ESP ESP ROU GRC ESP GRC GBR ESP GBR ESP GRC ROU GBR GRC GBR ESP ROU GRC GRC GRC GRC GBR GBR GRC GRC GBR GBR ESP GRC GBR ESP ROU GRC ROU ESP GRC GRC ESP -2 Regression results suggest that for the typical EU member state a 1 million US-dollar increase in the trade deficit would ‘cost’ 11 jobs -4  wiiw -100000 -50000 0 50000 100000 trade balance

15 Conclusions  The analysis of trade related employment effects should take into accounts exports and imports  The pattern of job embodiments of international trade across occupations suggests a trade-induced skill- upgrading for the EU economy  Possibly there is a ‘nuanced’ version of job polarisation in the EU economy  The position of the trade balance is decisive for the job embodiment of international trade at the aggregate level  wiiw

16 Future Work  Take into account non-competing imports (industry based-approach)  Individual results for exports/imports and manufacturing/services (at the level of occupations)  Bring the country-level employment trend into the analysis (methodology)  Switch to ‘Trade in Employment’ approach  wiiw

17 Thank you for your attention!  wiiw