Globalization and employment nexus: Moderating role of human capital

Abstract

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. For this, annual panel data were collected from 1996 to 2019. The estimations have been done using 12 model specifications, 6 for direct and 6 for indirect impact association between globalization and employment through the human capital channel. The study uses generalized least square (GLS) method and generalized method of moments (GMM) for empirical analysis. The static and dynamic analysis shows that globalization’s direct and indirect impact on employment through the channel of human capital is positive. Industrial value added and economic growth leads to more employment creation, whereas population growth dampens it. Human capital plays a positive role in getting the advantage of globalization in terms of employment creation. This study confirms the literature recommendations of promoting human capital development to achieve globalization’s benefits for more employment creation.