Employment Growth and International Trade: A Small Open Economy Perspective

In this paper, we use a detailed dataset containing information about all international trade transactions of the population of Danish firms over more than a decade to analyze the relationship between export and import decisions and employment growth. We further distinguish between imports of final goods and imports of intermediate products. We find that both imports and exports decisions are positively related to employment growth. Interestingly, both finished goods and intermediate goods imports have a positive link. We also control for the re-exporting process, i.e. firms importing final goods to re-export them afterwards.