Enhancing employment through log export ban: Insights from wood-processing firms in developing countries

This study assesses the impact of the adoption of the log export ban (LEB) on the employment of 1739 wood processing firms surveyed between 2006 and 2018 and located in 74 developing countries. Using the entropy balancing approach, our results suggest that LEB policy adoption significantly increases total employment in firms located in adopter countries compared to those in non-adopter countries. In addition, we examine the heterogeneous effects of LEB policy on various categories of employment. Our findings indicate that the implementation of LEB significantly increases production employment, permanent employment, and unskilled labor, while it does not exhibit a statistically significant impact on non-production employment, temporary employment, and skilled labor. All of these results are robust to the use of an alternative impact analysis method, that is, the instrumental variables (IV) approach. All of these results can be attributed to the specific context of the wood processing industries in developing countries, characterized by labor-intensive operations and a predominant focus on low-complexity wood processing. The evidence suggests that the implementation of LEB policy should be complemented by additional industrial and employment policies. Such policies could, for example, facilitate the attraction of foreign direct investment (FDI), promote technology transfers, and foster the development of highly specialized training programs.