Working Paper: CEPR ID: DP15049
Authors: Cristian Ugarte; Marcelo Olarreaga
Abstract: The paper examines the impact of export promotion on aggregate unemployment. Wefindnd that increases in the share of Export Promotion Agencies' (EPAs) budgets on totalexports lead to small decreases in aggregate unemployment. This effect is amplifi edwhen export promotion efforts are concentrated in sectors in which the country hasa comparative advantage. On the other hand, when EPAs aim at reducing aggregateunemployment by focusing their efforts in sectors with high levels of unemployment,then aggregate unemployment increases. These results suggest that even if EPAs' pri-orities were to shift towards reducing unemployment, this would be better addressedby focusing on sectors in which the country has a comparative advantage rather thansectors with high labor market frictions.
Keywords: export promotion; unemployment; comparative advantage
JEL Codes: F13; F14; O19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Share of EPAs budgets on total exports (F10) | Aggregate unemployment (J64) |
| Share of EPAs budgets on total exports (F10) | Aggregate unemployment reduction (J64) |
| Sectors with high levels of unemployment (J68) | Aggregate unemployment (J64) |
| Alignment with comparative advantage (F11) | Aggregate unemployment (J64) |