Title: International trade patterns and labour markets – an empirical analysis for EU member states

Authors: Goetz Zeddies

Addresses: Halle Institute for Economic Research (IWH), Kleine Maerkerstraße 8, D-06108 Halle/Saale, Germany

Abstract: During the last decades, international trade flows of the industrialised countries became more and more intra-industry. At the same time, employment perspectives particularly of the low skilled by tendency deteriorated in these countries. This phenomenon is often traced back to the fact that intra-industry trade (IIT), which should theoretically involve low labour market adjustment, became increasingly vertical in nature. Against this background, this paper investigates the relationship between international trade patterns and selected labour market indicators in European countries. As the results show, neither inter- nor vertical intra-industry trade (VIIT) do have a verifiable effect on wage spread in EU member states. As far as structural unemployment is concerned, the latter increases only with the degree of countries’ specialisation on capital intensively manufactured products in inter-industry trade relations. Only for unemployment of the less skilled, a slightly significant impact of superior VIIT seems to exist.

Keywords: European integration; international economics; trade markets; labour markets; market interactions; labour demand; structural unemployment; international trade; trade patterns; EU; European Union; member states; trade flows; industrialised countries; employment perspectives; low skilled workers; market adjustments; vertical trade; labour market indicators; inter-industry trade; wage spread; capital intensive products; manufactured products; trade relations; France; Germany; Austria; Spain; United Kingdom; UK; Czech Republic; Holland; Netherlands; Italy; Hungary; Poland; Portugal; Slovakia; Romania; Bulgaria; business research; intra-industry trade.

DOI: 10.1504/IJEBR.2012.044247

International Journal of Economics and Business Research, 2012 Vol.4 No.1/2, pp.96 - 115

Published online: 25 Nov 2014 *

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