What influence does the exchange rate of a nation's currency have on jobs in that country?
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This entry was posted on Wednesday, July 2nd, 2008 at 3:21 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
July 2nd, 2008 at 3:21 am
when a country's currency is up, companies in that country are more likely to send jobs overseas because other currencies are cheaper
When a county's currency is down, other countries are more likely to send work into that country.
A good example:
Right now the US dollar is low compared to the Euro. I work at a US aerospace supply company. We are seeing a ton of work from Airbus right now because its cheaper for Airbus to buy parts in US dollars than for them to buy European made parts, for which they must pay in Euros
July 2nd, 2008 at 3:21 am
To answer this all we need is a little intuitive thinking. If a nation's currency rises relative to other currencies, then the real wage for the jobs in that country has increased as well. The demand for jobs in that country will rise giving us higher employment and higher pay, all other things being equal (ceterss paribus). Remember, the the job market is quite simply a supply and demand graph. What factors affect this market will lead to the ultimate outcome.
July 2nd, 2008 at 3:21 am
A higher currency means that the cost of hiring labour is greater.