The Impact of External Factors on Job Creation and Destruction in the Colombian Manufacturing Sector

The aim of this paper is to study the impact of external factors on employment in the manufacturing sector in Colombia, using the job flows approach. In particular, we analyze the effects of the real exchange rate, foreign direct investment and the degree of openness of firms on job creation and destruction. We find that an increment in the real exchange rate increases job creation and decreases job destruction, suggesting a positive impact on net employment growth in the sector. Also, manufacturing firms that trade actively in the international market magnify the effect of the real exchange rate on employment flows. Finally, manufacturing employment is negatively affected by the Dutch disease phenomenon.

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