Trade and jobs in South Africa: a case of skilled vs unskilled workers

Purpose The purpose is to establish the impact of trade on manufacturing employment in South Africa. Design/methodology/approach Two techniques, the Pooled Mean Group (PMG) and the Dynamic Common Correlated Effects (DCCE), are applied on a panel dataset comprising 26 three-digit manufacturing industries with data observed between 1970 and 2016. Findings The impact of trade on employment is miniscule at best and insignificant at worst once the study controls for cross-sectional dependency. This is true for both skilled and unskilled workers. Employment of skilled workers is explained by remuneration while employment of unskilled workers is explained by output dynamics. Practical implications Trade is widely attacked for causing labour market disruption through job losses. This hypothesis is not supported by data for South Africa as no link is confirmed between trade and employment of skilled and unskilled workers. Originality/value Estimating the trade and employment link for skilled and unskilled workers while controlling for both endogeneity and cross-sectional dependency.