Structural change, open economy and employment: A Structural Change and Economic Dynamics approach

Abstract

The main objective of this paper is to analyse the effects of international trade on employment, focusing particularly on the case where domestic prices are higher than foreign prices, using Pasinetti’s (1981 and 1993) framework as the basic structure of analysis. It is shown that technological progress affects employment levels through the Kaldor-Verdoorn law by endogenizing productivity growth when national prices are competitive. We conclude that high imports negatively affect employment levels, supporting heterodox views regarding trade openness.

Keywords

• Structural Change
• Open Economy
• Cumulative Causation
• Employment