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The impacts of trade liberalization on employment and wages in Tunisian industries

  • Ilham Haouas

    (MSE-Université Paris Panthéon-Sorbonne, France)

  • Mahmoud Yagoubi

    (MSE-Université Paris Panthéon-Sorbonne, France)

  • Almas Heshmati

    (Seoul National University, TEPP, Seoul, Korea and MTT Economic Research, Helsinki, Finland)

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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Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 17 (2005)
Issue (Month): 4 ()
Pages: 527-551

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Handle: RePEc:wly:jintdv:v:17:y:2005:i:4:p:527-551
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  1. Levinsohn, James, 1999. "Employment responses to international liberalization in Chile," Journal of International Economics, Elsevier, vol. 47(2), pages 321-344, April.
  2. repec:tpr:qjecon:v:88:y:1974:i:1:p:98-116 is not listed on IDEAS
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  4. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
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  10. Dornbusch, Rudiger, 1974. "Tariffs and nontraded goods," Journal of International Economics, Elsevier, vol. 4(2), pages 177-185, May.
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