International trade, technological shocks and spillovers in the labour market: a GVAR analysis of the US manufacturing sector

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu WO R K I N G PA P E R S E R I E S N O 7 3 1 / F E B R UA RY 2 0 0 7 Terms of use: Documents in EconStor may INTERNATIONAL TRADE, TECHNOLOGICAL SHOCKS AND SPILLOVERS IN THE LABOUR MARKET A GVAR ANALYSIS OF THE US MANUFACTURING SECTOR by Paul Hiebert and Isabel VansteenkisteIn 2007 all ECB publications feature a motif taken from the €20 banknote. WO R K I N G PA P E R S E R I E S N O 7 3 1 / F E B R UA RY 2 0 0 7This paper can be downloaded without charge from http://www.ecb.int or from the Social Science Research Network electronic library at http://ssrn.com/abstract_id=963068. Specification issues and integration AbstractWe empirically analyse the response of US manufacturing labour market variables to various shocks, notably to trade openness and technology. The econometric approach involves an application of the recently developed global VAR (GVAR) methodology of Dées, DiMauro, Pesaran, and Smith (2005) to 12 manufacturing industries over the period . This framework allows for an assessment of both shocks to weakly exogenous variables and intra-industry spillovers. In this vein, beyond a standard set of labour-market related variables (employment, real compensation, productivity and capital stock) and exogenous factors (a sector-specific measure of trade openness, along with common technology and oil price shocks), specific measures of manufacturing-wide variables are included for each sector. Generalised impulse responses indicate that increased trade openness negatively affects real compensation, has negligible employment effects and leads to higher labour productivity. These impacts, however, are relatively weaker those induced by technology shocks, with the latter positively and significantly affecting both real compensation and employment. There is also evidence of positive spillovers across industries from sector-specific employment and productivity shocks. Impact elasticities suggest strong intra-sectoral linkages for employment and capital stock formation, contrasting with weak linkages for what concerns real compensation and productivity. JEL classification: F16, J01, O33. Keywords: trade, technological change, labour market, global VAR (GVAR), impulse responses. ECB Working Paper Series No 731 February 2007 Non-technical summaryThere has been sizeable interest in recent years concerning the economic impacts of increasing trade integration and skill-biased technological change on the global economy. Given the reallocations of r...

Modeling and Forecasting Regional Tourism Demand Using the Bayesian Global Vector Autoregressive (BGVAR) Model

“…Other studies have a more specific focus, such as the financial market (e.g., Chudik and Fratzscher 2011;Galesi and Sgherri 2009), trade flows and capital flows (e.g., Boschi 2012; N'Diaye and Ahuja 2012), the housing market (e.g., Vansteenkiste and Hiebert 2011), and the labor market (e.g., Hiebert and Vansteenkiste 2010). The GVAR approach has also been used as an effective tool for forecasting economic variables (e.g., Greenwood-Nimmo, Nguyen, and Shin 2012;Pesaran, Schuermann, and Smith 2009).…”

Arab Countries Between Winter and Spring: Where Democracy Shock Goes Next!

“…Most of GVAR literature relies basically on bilateral international trade to compute these weights, e.g., Pesaran et al (2004); Dees et al (2007). However, few studies opt different weight mechanisms; for instance, (Galesi and Sgherri, 2009) use financial weights, Vansteenkiste (2007) uses geographical distances based weights, Hiebert and Vansteenkiste (2010) adopt weights based on sectoral input-output tables across industries. serves as a reference 5 , each country, on its own is considered as a small open economy and thereby cannot affect the whole system.…”

Evaluating a Global Vector Autoregression for Forecasting

“…For further research on GVARs, see Garratt et al (2006); Pesaran and Smith (2006); Dées, Holly et al (2007); Pesaran et al (2007); Hieberta and Vansteenkiste (2009);Pesaran et al (2009);Castrén et al (2010); Chudik and Pesaran (2011); and the comments and rejoinders to Pesaran et al (2004) and Pesaran et al (2009). Juselius (1992 provides a conceptual precursor to GVARs in her sectorby-sector analysis of the Danish economy to obtain multiple long-run feedbacks entering an equation for domestic inflation.…”