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The Single Market as an Engine for Employment Through External Trade

This article quantifies for the first time the European employment effects of extra‐EU exports and the correct number of jobs generated through the intra‐EU trade (single market) associated with the production of such exports. The literature has neglected very often the latter effects mainly due to the lack of an appropriate methodology and data. The main results of the article show that, between 2000 and 2007, an increasing number of European jobs were dependent on extra‐EU exports and on the strengthening of the trade linkages across the internal market. During the period considered, the EU employment supported by extra‐EU exports grew from 22 to 25 million jobs, out of which 9 million jobs (in 2007) were due to spillover and feedback effects associated with the single market. Between 2000 and 2007 the EU also became a more vertically integrated economy, and reduced the labour intensity of the extra‐EU exports.