DP14222 Unravelling Trade Integration: Local Labour Market Effects of the Brexit Vote
|Author(s):||Beata Javorcik, Benjamin Kett, Layla O'Kane, Katherine Stapleton|
|Publication Date:||December 2019|
|Keyword(s):||Brexit, Hiring, Labour Demand, online job adverts, trade policy, trade uncertainty|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14222|
This paper uses high frequency data on the near universe of online job adverts in the UK to study the impact of the trade policy uncertainty caused by the Brexit referendum on labour demand between January 2015 and September 2019. It develops measures of regional exposure to the threat of potential most-favoured-nation (MFN) tariffs if the UK were to leave the EU without a trade deal. It shows that regions relatively more exposed to the tariff threat differentially reduced online hiring in the period after the referendum and this effect was distinct from the impact of the exchange rate depreciation, uncertainty surrounding future immigration policy and the financial services sector. Both skilled and unskilled job adverts were affected, with unskilled job adverts experiencing a slightly greater relative decline. Based on newspaper coverage and Google searches, the paper develops two novel time-varying measures of Brexit-specific trade policy uncertainty and shows that the relative decline in job adverts was concentrated in months with greater uncertainty about future trade arrangements with the EU. The study concludes that the threat of unravelling global integration has an important impact on labour markets.