Arbeitspapier

The Impacts of Trade Liberalization on Employment and Wages in Tunisian Industries

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 sectors in Tunisia. Causality tests show that causality is unidirectional. Wages strongly causes employment but employment does not cause wages. There is significant difference in the direction of responses in the short and long run. Results from empirical testing using the models find only support for the short-run theoretical predictions for the exportable sector. Similar results obtained for the importable sectors. We find the differences in the short and long-run wage and employment responses to changes in export to be explained by learning by doing, organizational changes and improved factor utilization and labour productivity. 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. Exportable employment could therefore only rise if importable employment fell. However, as we have seen, the supply of labour increased dramatically in Tunisia as women entered the labour market. This allowed importable employment to be maintained (even slightly increased) as the exportable sector expanded.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 688

Classification
Wirtschaft
Trade: General
Wage Level and Structure; Wage Differentials
Industry Studies: Manufacturing: General
Labor Demand
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
Subject
trade
labour market
exports
imports
manufacturing
panel data
Tunisia
Außenhandelsliberalisierung
Außenwirtschaft
Arbeitsmarkt
Lohnniveau
Industrielohn
Verarbeitendes Gewerbe
Tunesien

Event
Geistige Schöpfung
(who)
Haouas, Ilham
Yagoubi, Mahmoud
Heshmati, Almas
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2003

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Haouas, Ilham
  • Yagoubi, Mahmoud
  • Heshmati, Almas
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2003

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