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Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies

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  • Matteo Fiorini

    (Robert Schuman Centre for Advanced Studies, European University Institute)

  • Bernard Hoekman

    (Robert Schuman Centre for Advanced Studies, European University Institute)

  • Clément Malgouyres

    (Banque de France)

Abstract

Policy reforms targeting the services sectors are a neglected dimension of the process of structural transformation and economic development. The effects of such reforms on employment across industries as a function of their use of services as intermediate inputs are theoretically ambiguous and remain largely understudied. This paper uses sector-level data for 24 transition economies for the 1990-2012 period to assess the impacts of services policy reforms on downstream manufacturing employment. We find a negative effect of services reforms on manufacturing sector employment. This is mostly associated with the process of transition to a market-based economy. Controlling for transition-specific dynamics, the data suggest a neutral effect of progress towards adopting “best practice” policies for upstream services on employment in downstream manufacturing. Furthermore, in line with the extant literature, we confirm that services policy reforms enhance productivity of downstream manufacturing industries. Finally, we find that the negative effects on downstream employment are mitigated in countries with better economic governance and human capital.

Suggested Citation

  • Matteo Fiorini & Bernard Hoekman & Clément Malgouyres, 2017. "Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies," Working Papers 1707, Council on Economic Policies.
  • Handle: RePEc:ceq:wpaper:1707
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    1. Omar Bamieh & Francesco Bripi & Matteo Fiorini, 2022. "Services trade and labor market outcomes: Evidence from Italian firms," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 673-701, August.

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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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