Trade-Labour-Dynamics : An industry-level analysis of the impact of trade on the adjustment of domestic labour demands

Sammanfattning: In line with the canonical Heckscher-Ohlin model, trade liberalization instigates a pro-cess during which production of goods and services moves where it can be conducted in the most efficient way. Naturally, this process also entails changes in the labour demand of domes-tic industries. The most prominent example for this is the decline in employment in manufactur-ing industries due to increasing import competition from China. While the impact of this “China-Shock” on manufacturing employment in developed economies is widely acknowl-edged, research on how imports and exports interact to affect manufacturing and other indus-tries is scarce. For a panel of eleven Western European and Scandinavian countries, this thesis analysed how the occurrence of imports and exports has influenced labour demands in six in-dustries (both service and manufacturing) from 1996 to 2011 using data from Eurostat and the OECD. In general, the findings show that imports do put domestic industry-level labour demand in distress, especially in manufacturing industries. On the other hand, the findings also show that exports help to increase labour demand, especially in high-skill service industries.