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The impact of firm downsizing on workers: Evidence from Ethiopia’s ready-made garment industry

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Listed:
  • Hardy, Morgan
  • Kagy, Gisella
  • Demeke, Eyoual
  • Witte, Marc
  • Meyer, Christian Johannes

Abstract

We analyze matched employee–employer data from Ethiopia’s largest special economic zone during a period of downsizing pressure from the COVID-19 world import demand shock. We observe substantial job displacement during the shock peak, particularly for new hires. These largely female and rural-to-urban migrants persistently “fall off the employment ladder”, remaining unemployed both within and outside the zone even after employers have recovered from the shock. We observe high levels of urban-centered food insecurity and depression symptoms during the crisis peak, regardless of employment status. Our findings highlight the importance of social protection policies within export-oriented development strategies.

Suggested Citation

  • Hardy, Morgan & Kagy, Gisella & Demeke, Eyoual & Witte, Marc & Meyer, Christian Johannes, 2024. "The impact of firm downsizing on workers: Evidence from Ethiopia’s ready-made garment industry," World Development, Elsevier, vol. 176(C).
    • Handle: RePEc:eee:wdevel:v:176:y:2024:i:c:s0305750x23002309
    DOI: 10.1016/j.worlddev.2023.106412
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    More about this item

    Keywords

    Job displacement; Trade shock; Global value chains; Gender; Ethiopia; COVID-19;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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