Panel Data Model Analysis on the Relationship Between Export and Employment: The Case of OECD CountriesHande Aksöz Yılmaz
For many years, researchers have focused more on the effects of exports on employment; however, the literature in this area has not found common ground, and the relationship between exports and employment is still not clear. This study investigates the impact of export on the employment of 28 OECD (The Organisation for Economic Co-operation and Development) countries using panel data estimation techniques that reveal the effect of different properties between units, allows the degree of freedom to increase, and, therefore, offers more effective estimators using cross-section data together. Thus, the study uses data spanning from 2001 to 2019 and variables such as employment, exports, economic growth, per unit labor costs, trade openness, financial openness, and unemployment payment rates. The findings reveal that the exports of 28 OECD countries are significant and have a negative significant effect on their employment. The economic growth, employment level of the previous period, trade openness, and exports have an impact on employment. While economic growth, trade openness, and previous employment levels have a positive effect on employment in the current period, exports have a negative effect on employment. The results imply that the export may affect to employment level. depending on political and economic factors, particularly the production structures of countries, contrary to traditional foreign trade theories that state that exports increase employment. It is critical to adapt to the rapidly changing market demand and create a competitive environment that can encourage adaptation. Policymakers and social partners have a key role to play through active cooperation in connecting education and training systems to industry and matching labor supply to demand.
İhracat ve İstihdam İlişkisi Üzerine Panel Veri Modeli Analizi: OECD Ülkeleri ÖrneğiHande Aksöz Yılmaz
İhracatın istihdam üzerindeki etkisi uzun yıllardır araştırmacıların ilgi odağındadır, fakat bu alandaki literatür ortak bir paydada buluşamamış görünmektedir ve ihracat ile istihdam arasındaki ilişki hala net değildir. Bu makale, 28 OECD ülkesinin ihracatının onların istihdamları üzerindeki etkisini, birimler arasındaki farklı özelliklerin etkisini ortaya koyan, yatay kesit veri ve zaman serisi verileri birlikte kullanarak serbestlik derecesinin artmasına izin veren dolayısıyla daha etkili tahmin ediciler sunan panel veri tahmin yöntemi kullanarak incelemeyi amaçlamaktadır. Bu amaç için, makale 2001–2019 dönemini kapsayan verileri ve istihdam, ihracat, ekonomik büyüme, birim işçilik maliyetleri, işsizlik ödemesi, ticari açıklık ve finansal açıklık oranları gibi değişkenleri kullanır. Bulgulara göre 28 OECD ülkesinin ihracat büyümesi, istihdam büyümesini negatif yönde etkilemekte anlamlıdır. Ekonomik büyüme, bir önceki dönemin istihdam seviyesi, ticari açıklık ve ihracat istihdam üzerinde etkiler ortaya çıkarmaktadır. Ekonomik büyüme, önceki dönem istihdam seviyesi ve ticari açıklık, cari dönemdeki istihdamı pozitif etkilerken; ihracat, istihdam üzerinde negatif yönde etkili olmaktadır. Çalışma sonucunda elde edilen tahminler, ihracat büyümesinin istihdam büyümesine etkisinin, ihracatın istihdamı artırdığını belirten geleneksel dış ticaret teorilerinin aksine, başta ülkelerin üretim yapıları olmak üzere siyasi ve ekonomik faktörlere göre değişeceğini ima etmektedir. Hızla değişen pazar talebine uyum sağlamak ve uyumu teşvik edebilecek rekabetçi bir ortam yaratmak çok önemlidir. Politika yapıcılar ve sosyal ortaklar, eğitim ve öğretim sistemlerini endüstriye bağlama ve işgücü arzını taleple eşleştirme konusunda aktif işbirliği yoluyla oynayacakları kilit bir role sahiptir.
This study investigates the effect of export on the employment of 28 OECD countries. Thus, this study examines the effect of export on its employment within the framework of the panel data model, which presents more effective estimators. The study uses data spanning from 2001 to 2019 and variables such as employment, exports, economic growth, per unit labor costs, and unemployment payment rates. The primary motivations behind this research are twofold. First, the relationship between export and employment is presented within the framework of the panel data model. Second, the impact of exports on employment is explained taking into account other macroeconomic variables that help explain employment. Accessible data determine the scope of the study and allows the study to be analyzed on 28 OECD countries consisting of Australia, Austria, Belgium, Canada, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Korea, Latvia, Luxembourg, New Zealand, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States.
In the literature, a large amount of empirical research was conducted, which examined the relationship between export and employment for different countries. These studies were analyzed for the relationships between the countries’ export, many of which were members of OECD, and its employment. In this study, the employment model is estimated using a fixed-effect model based on panel data estimation techniques, which reveals the effect of different properties between units, allows the degree of freedom to increase, and offers more effective estimators by using cross-section data together. Panel data analysis is a convenient method, because it allows the existence of systematic unobserved differences between units that can be associated with observed factors for evaluate the effects of panel data set. The explanation of variables and data sources are shown in Table 2, the variables in this study consist of employment (number of employed people), GDP per capita (GDP measured in constant 2015 US$), export (US$ converted, seasonally adjusted), unit labor cost (employment based on the entire economy), and gross replacement rates in unemployment (based on a one-person unemployment period of at least two months, covering 67% of the average wage). Trade openness ratio refers to the ratio of sum of imports and exports to GDP, and financial openness expresses the ratio of net financial accounts to GDP.
The findings indicate a negative relationship between the export of 28 OECD countries and its employment. The economic growth, employment level of the past period, trade openness, and exports have an impact on employment. While economic growth, trade openness, and previous employment levels have a positive effect on employment in the current period, exports have a negative effect on employment. In the estimates obtained from the model, the change in labor costs per unit, financial openness, and unemployment payment rates are not meaningful in explaining the change in employment. Among the variables that explain the change in employment, the variable that affects the terms of the coefficient the most is the change in economic growth. This finding contradicts the result of traditional trade theories. However, no significant relationship between exports and employment was found as well in some studies, which states that exports negatively affect employment. Our estimation results are in line with Greenway et al. (1991), Jenkins (2004), Were (2011), Aktakaş et al. (2013), and Ko et al. (2015).
It is critical to adapt to rapidly changing market demands and to create a competitive environment that can encourage adaptations. Policymakers and social partners have a key role to play through active cooperation in connecting education and training systems to industry and matching labor supply to demand. This study has only assessed the effective export on employment in the context of a macro perspective, but a possible link between employment in the services sector, export, and the skilled labor demand has not been considered. Therefore to investigate the effect of exports on the employment level of the services sectors in 28 OECD countries may provide more specific findings. Also, this study contributes to the research in terms of revealing the static effect of export on employment. Finally, we think that research helps us deal with all aspects of this issue when we investigate the dynamic effect of export on employment in the context of services sectors for 28 OECD countries.
The Coronavirus disease 2019 (COVİD-19) is an unprecedented global shock involving simultaneous cuts in both supply and demand in an interconnected world economy. The pandemic points to a transformation in many topics specific to labor markets such as unemployment, new forms of work, and wage regulations. Therefore, future research should analyze the relationship between exports and home office work, and new forms of employment and unemployment, including the effects of the COVİD-19 global pandemic. Studying this phenomenon in conjunction with global shocks can be useful to advance understanding of this phenomenon and can generalize research findings.