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Export Processing Zone Expansion in an African Country: What are the Labor Market and Gender Impacts?

Listed author(s):
  • Peter Glick


    (Cornell University)

  • François Roubaud


    (DIAL, IRD, Paris)

Registered author(s):

    Whether EPZs are beneficial for development remains a subject to controversy. This paper analyzes part of the question, the labor market impacts, using unique time-series labor force survey data from a unique (for Africa) environment: urban Madagascar, in which EPZs grew very rapidly during the 1990s. Employment in the EPZs exhibits some basic patterns seen elsewhere in export processing industries of the developing world (predominance of young, semi-skilled female workforce). Taking advantage of microdata availability, we estimate earnings regressions to establish the sector wage premia. According to our estimates (which confirm results of other studies based on aggregate data), employment in EPZs represents a significant step up in pay for women who would otherwise be found in very poorly remunerated informal sector work. EPZs may have significant impacts on poverty because they provide relatively high wage opportunities for those with relatively low levels of schooling. Further, by disproportionately drawing women from the low wage sector informal sector (where the gender pay gap is very large) to the relatively well paid export processing jobs (where pay is not only higher but also similar for men and women with similar qualifications), EPZs have the potential to contribute substantially to improved overall gender equity in earnings in the urban economy. Finally, along many dimensions, jobs in the export processing zone are ‘high quality’ jobs, comparable to or even superior to other parts of the formal sector. _________________________________ Le rôle des zones franches d’exportation comme facteur de développement reste un sujet largement controversé. Cette étude tente de répondre à certains aspects de cette question liés au marché du travail à partir d’une série d’enquêtes emploi sans équivalent en Afrique dans un environnement tout aussi exceptionnel : les zones urbaines malgaches qui ont connu une croissance accélérée des entreprises franches au cours des années 1990. L’emploi en zone franche présente de nombreuses similitudes avec ce qui a pu être observé dans d’autres pays en développement (présence massive d’une main-d’oeuvre féminine et peu qualifiée). La mobilisation de données individuelles permet de conforter certains résultats obtenus par la plupart des études antérieures à partir de données agrégées. L’estimation de fonctions de gain montre que les entreprises franches procurent des emplois féminins mieux rémunérés que ceux qui auraient pu être obtenus dans le secteur informel, avec pour conséquence un impact substantiel sur la réduction de la pauvreté. De plus, en bénéficiant massivement à des femmes qui autrement auraient dû se contenter d’emplois dans le secteur informel, où les écarts de revenus entre hommes et femmes sont très importants, alors qu’ils ne sont pas significativement différents en zone franche, cette dernière contribue à réduire le gap de rémunération suivant le genre. Enfin, dans de nombreux domaines, la zone franche procure des emplois de qualité, comparables, sinon meilleurs, que ceux que fournissent les autres segments du secteur formel.

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    File Function: First version, 2004
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    Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2004/15.

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    Length: 29 pages
    Date of creation: Dec 2004
    Date of revision: Dec 2004
    Handle: RePEc:dia:wpaper:dt200415
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    1. Paul Schultz, T., 2002. "Why Governments Should Invest More to Educate Girls," World Development, Elsevier, vol. 30(2), pages 207-225, February.
    2. Jean-Pierre Cling & Mireille Razafindrakoto & François Roubaud, 2004. "Export Processing Zones in Madagascar : an Endangered Success Story," Working Papers DT/2004/02, DIAL (Développement, Institutions et Mondialisation).
    3. Nicita, Alessandro & Razzaz, Susan, 2003. "Who benefits and how much? : how gender affects welfare impacts of a booming textile industry," Policy Research Working Paper Series 3029, The World Bank.
    4. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    5. Jean-Pierre Cling & Gaëlle Letilly, 2001. "Export processing zones : A threatened instrument for global economy insertion ?," Working Papers DT/2001/17, DIAL (Développement, Institutions et Mondialisation).
    6. Knight, J B & Sabot, R H & Hovey, D C, 1992. "Is the Rate of Return on Primary Schooling Really 26 Per Cent?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 1(2), pages 192-205, August.
    7. International Monetary Fund, 2003. "Madagascar; Selected Issues and Statistical Appendix," IMF Staff Country Reports 03/7, International Monetary Fund.
    8. Appleton, Simon & Hoddinott, John & Knight, John, 1996. "Primary Education as an Input into Post-primary Education: A Neglected Benefit," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 211-219, February.
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