Trade Openness, Real Exchange Rates and Job Reallocation: Evidence from Belgium", mimeo

(PRELIMINARY VERSION- NOT TO BE QUOTED) We investigate the impact of sectoral real effective exchange rates and trade openness on job reallocation at the industry level. The analysis is carried on Belgium, for 82 3-digit man-ufacturing sectors. We employ a firm-level dataset containing information for 14,599 firms, over the time span 1996-2002. After depicting a theoretical framework for the investiga-tion, sectoral job flows are computed and their patterns analyzed. Significant cross-industry heterogeneity is documented both in terms of job reallocation and trade openness/real ex-change rates dynamics. Effects of international competition factors are then explored both at a descriptive and econometric level. We find that real exchange rate variations do have a significant impact on sectoral job flows, and this impact is magnified by increasing levels of openness to trade. In particular, a real appreciation is found to lower net job growth through enhanced job destruction, while job creation is not significantly affected