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The Impacts of Trade Liberalization on Employment and Wages in Tunisian Industries

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  • Haouas, Ilham
  • Yagoubi, Mahmoud
  • Heshmati, Almas

Abstract

This paper investigates short and long-run effects of trade liberalization on employment and wages. Employment and wage equations are estimated using data (1971-96) for importable and exportable industrial sectors in Tunisia. Causality tests show that causality is unidirectional. Wages strongly causes employment. There is significant difference in the direction of effects in the short and long-run. Empirical results only support the short-run theoretical predictions for the exportable sectors. A possible reason for the divergence of theory and practice is that the theoretical model is premised on the basis of a fixed supply of labour. Employment at exportable sectors could therefore only rise if employment at importable fell. However, as we have seen, the supply of labour increased dramatically in Tunisia as women entered the labour market. This allowed employment at importable sectors to be maintained as the exportable sector expanded. Copyright © 2005 John Wiley & Sons, Ltd.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/rp2002/dp2002-102.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper DP2002/102.

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Length: 32 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:unu:wpaper:dp2002-102

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Keywords: trade; labour market; exports; imports; manufacturing; panel data; Tunisia;

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References

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  1. John M. Abowd & Thomas Lemieux, 1990. "The Effects of International Competiton on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Working Papers 3352, National Bureau of Economic Research, Inc.
  2. Levinsohn, James, 1999. "Employment responses to international liberalization in Chile," Journal of International Economics, Elsevier, vol. 47(2), pages 321-344, April.
  3. Dong, Xiao-yuan, 1998. "Employment and Wage Determination in China's Rural Industry: Investigation Using 1984-1990 Panel Data," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 485-501, September.
  4. Dornbusch, Rudiger, 1974. "Tariffs and nontraded goods," Journal of International Economics, Elsevier, vol. 4(2), pages 177-185, May.
  5. Milner, Chris & Wright, Peter, 1998. "Modelling Labour Market Adjustment to Trade Liberalisation in an Industrialising Economy," Economic Journal, Royal Economic Society, vol. 108(447), pages 509-28, March.
  6. Heyman, Fredrik, 2001. "Wage Dispersion and Allocation of Jobs," Working Paper Series in Economics and Finance 479, Stockholm School of Economics.
  7. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
  8. Brecher, Richard A, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 98-116, February.
  9. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-91, October.
  10. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
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Cited by:
  1. Ilham Haouas & Mahmoud Yagoubi, 2004. "Trade liberalization and demand labor elasticities : evidence from Tunisia," Documents de travail 94, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
  2. Kyvik Nord°as, Hildegunn, 2005. "Labour implications of the textiles and clothing quota phase-out," ILO Working Papers 374452, International Labour Organization.
  3. Ben Salha, Ousama, 2013. "Does economic globalization affect the level and volatility of labor demand by skill? New insights from the Tunisian manufacturing industries," Economic Systems, Elsevier, vol. 37(4), pages 572-597.
  4. repec:iza:izadps:dp1084 is not listed on IDEAS

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