Does Trade Foster Employment Growth in Emerging Markets? Evidence from Turkey

• We test the impact of imports, exports and two-way trade on Turkish firms’ employment.
• Positive effects are detected for each internationalization strategy.
• There exist significant complementarity effects between exports and imports.
• Larger employment expansion is experienced by high trade intensity firms.
• The employment effect of trade reflects the rise of firm production scale.

SummaryThis work investigates the impact of importing, exporting, and two-way trading on firm labor demand in Turkish manufacturing. Adopting Multiple Propensity Score Matching techniques and Difference in Difference estimator, we support the positive internationalization impact on firm employment for an emergent country. Our evidence reveals the existence of complementarity effects between exports and imports, which is strengthened for high trade intensity firms. Furthermore, only high intensity exporting seems to promote the workforce skill upgrading in terms of an increase in the R&D worker share. The employment creation effect of firm internationalization reflects its large positive impact on firm production scale.