Employment and Exchange Rates: The Role of Openness and Technology

Fernando Alexandre (), Pedro Bação, João Cerejeira () and Miguel Portela ()

No 4191, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Real exchange rate movements are important drivers of the reallocation of resources between sectors of the economy. Economic theory suggests that the impact of exchange rates should vary with the degree of exposure to international competition and with the technology level. This paper contributes by bringing together these two views, both theoretically and empirically. We show that both the degree of openness and the technology level mediate the impact of exchange rate movements on labour market developments. According to our estimations, whereas employment in high-technology sectors seems to be relatively immune to changes in real exchange rates, these appear to have sizable and significant effects on highly open low-technology sectors. The analysis of job flows suggests that the impact of exchange rates on these sectors occurs through employment destruction.

Keywords: international trade; exchange rates; job flows (search for similar items in EconPapers)
JEL-codes: F16 F41 J23 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2009-05
New Economics Papers: this item is included in nep-cba, nep-lab and nep-opm
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Citations: View citations in EconPapers (17)

Published - published in: Open Economies Review 2011, ,22 (5), 969 - 984

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Related works:
Journal Article: Employment and Exchange Rates: The Role of Openness and Technology (2011)
Working Paper: Employment and exchange rates: the role of openness and technology (2009)
Working Paper: Employment and Exchange rates: the Role of Openness and Technology (2009)
Working Paper: Employment and exchange rates: the role of openness and technology (2009)
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