Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94470
Authors: 
Klein, Martin
Weirowski, Tobias
Year of Publication: 
2011
Series/Report no.: 
Working Papers on Global Financial Markets 24
Abstract: 
This paper investigates the link between unemployment and external trade in Germany, using data on unemployment, international trade and economic activity for the 16 German federal states (Länder). With panel data econometrics we show that international trade as measured by state-wise trade shares have a significant negative impact on state-wise unemployment rates. We discuss to what extent this reflects mercantilist tendencies embedded in the political economy of the Federal Republic. There is no clear evidence in favor of simple mercantilism. We suggest three alternative explanations, linked to the structural rigidities of the German labor market, government involvement in the education and training system and certain labor market policies which provide government-subsidized unemployment insurance benefitting (mainly) export industries.
Subjects: 
International trade
panel study
JEL: 
F14
F15
O50
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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