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The Impact of Trade and Labor Market Regulations on Employment and Wages: Evidence from Developing Countries

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  • Rana Hasan

    () (Asian Development Bank)

Abstract

This paper examines the effects of openness and labor market rigidity on labor market outcomes in the manufacturing sector using panel data from 48 developing countries. Results from reduced form equations for employment and wages suggest hat on average trade liberalization has had a weak impact on employment and wages. At the same time, however, the effects of trade liberalization is any given country are conditional on the nature of labor market regulations: trade liberalization is more likely to have a positive impact on employment and wages in countries with flexible labor markets and vice versa. Additionally, more regulated labor markets tend to have higher average wages but these appear to come at the expense of sector wide employment.

Suggested Citation

  • Rana Hasan, 2001. "The Impact of Trade and Labor Market Regulations on Employment and Wages: Evidence from Developing Countries," Economics Study Area Working Papers 32, East-West Center, Economics Study Area.
    • Handle: RePEc:ewc:wpaper:wp32
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    References listed on IDEAS

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    1. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, vol. 11(1), pages 33-57, January.
    2. Helliwell, John F., 1994. "Empirical Linkages Between Democracy and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 24(2), pages 225-248, April.
    3. Asep Suryahadi, 1999. "Wage Inequality Between Skilled and Unskilled Labor in Indonesian Manufacturing Received," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 47, pages 271-288, September.
    4. Uma Karmbhampati & Pravin Krishna & Devashish Mitra, 1997. "The effect of trade policy reforms on labour markets: evidence from India," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 6(2), pages 287-297.
    5. Fallon, Peter R. & Lucas, Robert E. B., 1993. "Job security regulations and the dynamic demand for industrial labor in India and Zimbabwe," Journal of Development Economics, Elsevier, vol. 40(2), pages 241-275, April.
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    Cited by:

    1. Javed Iqbal & Misbah Nosheen & Syed Nawab Haider Naqvi, 2015. "Trade Shocks and Labour Adjustment: Evidence from Pakistan’s Manufacturing Industries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(3), pages 197-214.
    2. Shanthi Nataraj & Francisco Perez-Arce & Krishna B. Kumar & Sinduja V. Srinivasan, 2014. "The Impact Of Labor Market Regulation On Employment In Low-Income Countries: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 551-572, July.
    3. Mouelhi, Rim Ben Ayed, 2007. "Impact of trade liberalization on firm's labour demand by skill: The case of Tunisian manufacturing," Labour Economics, Elsevier, vol. 14(3), pages 539-563, June.
    4. Njikam, Ousmanou, 2016. "Trade liberalization, labor market regulations and labor demand in Cameroon," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 525-541.

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