a brief summary of what economictheory states about the link between trade and employment;?

Answer 1

In the most basic trade models, we do not see unemployment. Trade models are not macroeconomic models, and as such, do not really consider unemployment as such. The typical and standard trade models are of the neoclassic microeconomic variety, and thus assume full employment of resources. Moreover, unemployment is viewed as a short run phenomenon, whereas the standard trade models are all medium and longrun in scope.

This is not to say that we do not realize that there is jobloss incurred by trade. But what we assume is that those that are out of work will eventually find work, or drop out of the labor force alltogether.

Answer 2

In addition to what the previous person stated, I think the theory also goes along the lines of something like

As we start trading more and export jobs
The loss of jobs should be offset by the net increase of jobs due to the export (ex: now we need managers to oversee the department that we just moved oversees)
The sad part about this is that the amount of jobs we ship out are not equal to the amount of jobs created due to that export.

Answer 3

Depends on how big export-oriented and import-dependent industries are relative to the economy.

If they are small, trade has no relationship to employment whatsoever; employment responds only to domestic fiscal and monetary policies (which one is more powerful, depends on the exchange rate regime).

If they are large, employment will depend on terms of trade; low prices of important exports and high prices of important imports are likely to result in lower employment.

William Easterly from the World Bank once estimated that one percentage point of improvement in terms of trade for the average developing country typically leads to one percent increase in GDP.