Exchange Rates, Employment and Labour Market Rigidity

descriptionPublicationkeyboard_double_arrow_right Article 29 Dec 2015 Portugal English Publisher:WileyJournal:The World Economy, volume 40, pages 993-1,011 (issn: 0378-5920, eissn: 1467-9701,

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Authors: Alexandre, Fernando; Cerejeira, João; Portela, Miguel; Bação, Pedro;

doi: 10.1111/twec.12376

handle: 1822/49120

Exchange Rates, Employment and Labour Market Rigidity

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Abstract

AbstractIn this paper, we study the effect of labour market rigidity on the impact of exchange rate shocks on employment. We use a panel dataset comprising 22 manufacturing sectors across 23 OECD countries. In our econometric model, the impact of exchange rate fluctuations on sectoral employment is mediated by the degree of openness and by a measure of labour market rigidity: the OECD's employment protection legislation (EPL) index. Our results suggest that greater labour market rigidity reduces the impact of exchange rate shocks on employment. This effect is statistically significant for low‐technology sectors.

Country

Portugal

Related Organizations

University of Coimbra
Portugal
University of Minho
Portugal

Keywords

Exchange rates, International trade, Labour market, Employment protection

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