FEA Working Paper No. 2002-1 TRADE AND EMPLOYMENT: EVIDENCE IN MANUFACTURING OF SELECTED EU COUNTRIES

This working paper reviews general changes in EU labour markets, with reference to the four major EU countries, France, Germany, Italy and the United Kingdom. It sheds light on the possible links between foreign trade and employment in manufacturing industries, using data for a panel of 40 industries over the period 1970-1995. The estimates do not provide evidence of significant effects of import penetration and export intensity on employment. The exception is for the UK, whereby import penetration is negative and statistically significant. Generally, the responsiveness of employment varies negatively with the degree of import penetration, but not the level of technology. Evelyn Devadason Department of Applied Economics Faculty of Economics & Administration University of Malaya 50603 Kuala Lumpur Malaysia Tel: 603-79673726 Fax: 603-79567252 Email: [email protected] The research has been conducted in the context of a research attachment to the Kiel Institute of World Economics, Germany. Financial support via the University of Malaya European Studies Programme (UMESP) Faculty Fellowship for 3-months (1 August – 31 October 20001) of the Asia-Europe Institute is gratefully acknowledged. I would like to thank Claudia M. Buch for her valuable comments on the technical aspects of the paper. I have also benefited from discussions with Jurgen Stehn and Bernhard Heitger. The responsibility for the contents of the paper rests with the author, not the Institute or any names mentioned herein.