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The Impact of Trade and Labor Market Regulations on Employment and Wages: Evidence from Developing Countries

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  • Rana Hasan

    ()
    (Asian Development Bank)

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    Abstract

    This paper examines the effects of openness and labor market rigidity on labor market outcomes in the manufacturing sector using panel data from 48 developing countries. Results from reduced form equations for employment and wages suggest hat on average trade liberalization has had a weak impact on employment and wages. At the same time, however, the effects of trade liberalization is any given country are conditional on the nature of labor market regulations: trade liberalization is more likely to have a positive impact on employment and wages in countries with flexible labor markets and vice versa. Additionally, more regulated labor markets tend to have higher average wages but these appear to come at the expense of sector wide employment.

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    File URL: http://www.eastwestcenter.org/fileadmin/stored/pdfs/ECONwp032.pdf
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    Bibliographic Info

    Paper provided by East-West Center, Economics Study Area in its series Economics Study Area Working Papers with number 32.

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    Length: 42 pages
    Date of creation: Aug 2001
    Date of revision:
    Handle: RePEc:ewc:wpaper:wp32

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