Trade openness channels and labour market performance: evidence from Nigeria
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Date
Journal Title
Journal ISSN
Volume Title
Publisher
Emerald Publishing Limited
Abstract
Description
The implications of trade on developing economies have generated
substantial debates with most studies focussed on “openness in the policy”.
Hence, the purpose of this study is to focus on “openness in practice”.
Design/methodology/approach
This study uses two models and employed the vector error correction model
and structural vector autoregression, first, to examine the sectoral effects;
second, to investigate the efficacy of neoclassical and new trade theories; and
third, to analyse the effect of trade openness shock on Nigerian labour market
performance.
Findings
The results of the first model showed that trade openness has an adverse
effect on employment and wages in both the agriculture and manufacturing
sectors. Likewise, the study concludes that the new trade theory explains
trade's behaviour on employment and wages in Nigeria. The second model
showed that the effect of error shock from trade openness affected wages
more than employment.
Research limitations/implications
The study ignores the distributional effects due to unavailability of data.
Practical implications
The study suggested, amongst others, the need for policies mix on the labour
market via a coherent set of initiatives in other to increase the competitiveness
of Nigeria in the international market.
Originality/value
Most studies focussed on openness in policy through the channels identified
in the literature. However, this study investigates these channels in “openness
in practice” and investigates trade theories' efficacy on manufacturing and
agricultural sectors in Nigeria, which has been neglected in the literature.
Keywords
H Social Sciences (General), HF5601 Accounting