The Impact of Trade on Manufacturing Employment in Jordan: An Empirical Assessment

The aim of this study is to estimate the impact of trade on employment in Jordan’s manufacturing, using an empirical econometric model and a dynamic panel data at the industry level. Import penetration ratio (imports as a ratio of consumption) and export share have been regressed on domestic labor demand during 1994 – 2010. Results suggest that increased imports do not show any significant effect on employment in both total manufacturing sectors considered as a whole, and in capital-intensive industries, while there exists a statistically significant impact in labor-intensive ones; with a negative sign in the case of developed countries, and a positive one in those of “emerging and developing” economies and in China, which has a larger impact. But, although import penetration from China is statistically significant and positively correlated with employment in all the discussed cases, its economic significance is negligible. In comparison with exports, the impact of export share to all countries on total manufacturing employment, as well as on capital and labor-intensive industries has been also very small but negative.