Primary agricultural commodity trade and labour market outcomes
This paper explores empirically the effect of economic openness on labour market outcomes by focusing on the role of agricultural primary commodity exports and imports. Using cross-country data from 1991 to 2009 on commodity trade, employment, unemployment, and several controls, and dealing with endogeneity and measurement-error problems through instrumental variables technique, the findings suggest that trade of goods is associated with low unemployment rate and high employment rate. More importantly, high agricultural primary commodity exports to imports ratio mitigates these labour market benefits provided by trade. These results are robust to different indicators of unemployment variables and the structure of the data. The commodity-based industrialization should be encouraged to reduce the high and challenging young unemployment rate in African countries. By providing economies of scale and larger market, regional integration is undoubtedly a solution to boost diversification in African countries. Education should target long term development needs through appropriate technology acquisition, research and development, and improvement and implementation of traditional existing knowledge.