Globalization and employment nexus: Moderating role of human capital

What is it about?

While globalization has increased the movement and interconnection of goods, technology, and information, it has also affected employment. Many studies have analyzed the impact of globalization on employment creation resulting in positive and negative findings. However, an area of literature still needs to be explored studying how human capital affects the impact of globalization on employment creation. The current study contributes to the literature by analyzing the moderating role of human capital in the globalization-employment nexus in 26 Asian countries

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Photo by Joseph Chan on Unsplash

Photo by Joseph Chan on Unsplash

Why is it important?

According to Das and Ray [12], globalization and employment do not have long-run associations in most individual countries as well as in the panel of South Asian economies. They suggest that other channels might work between them as the domestic economic conditions sometimes determine employment. Any country’s relatively better employment scenario implies that the prevailing working environment is supposed to be friendly, which might create a better business environment. Hence, foreign multinational corporations are likely to be induced to invest in these countries, leading to better employment opportunities. Secondly, Alfalih and Hadj [13] study the moderating role of human capital and institutions in the FDI-employment nexus in Saudi Arabia. Following these two studies, the present study will cover at least two literature gaps. First, as pointed out by Alfalih and Hadj [13], it will study the moderating role of human capital in the globalization-employment nexus. Second, we are using a more comprehensive measure of globalization, i.e., the KOF index, as individual consideration of the sub-dimensions of globalization, i.e., foreign direct investment and trade liberalization, may be insufficient to explain the overall impact of globalization [13]. Second, they study the case of Saudi Arabia only. The present study will analyze the impact of a panel of twenty-six Asian economies.

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