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

Author

Listed:
  • Ilham Haouas
  • Mahmoud Yagoubi
  • Almas Heshmati
Abstract
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.

Suggested Citation

  • Ilham Haouas & Mahmoud Yagoubi & Almas Heshmati, 2002. "The Impacts of Trade Liberalization on Employment and Wages in Tunisian Industries," WIDER Working Paper Series DP2002-102, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2002-102
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    References listed on IDEAS

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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. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-791, October.
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    4. Milner, Chris & Wright, Peter, 1998. "Modelling Labour Market Adjustment to Trade Liberalisation in an Industrialising Economy," Economic Journal, Royal Economic Society, vol. 108(447), pages 509-528, March.
    5. Lee, Young, 1999. "Wages and Employment in China's SOEs, 1980-1994: Corporatization, Market Development, and Insider Forces," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 702-729, December.
    6. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
    7. Dornbusch, Rudiger, 1974. "Tariffs and nontraded goods," Journal of International Economics, Elsevier, vol. 4(2), pages 177-185, May.
    8. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
    9. Heyman, Fredrik, 2001. "Wage Dispersion and Allocation of Jobs," SSE/EFI Working Paper Series in Economics and Finance 479, Stockholm School of Economics.
    10. Dong, Xiao-yuan, 1998. "Employment and Wage Determination in China's Rural Industry: Investigation Using 1984-1990 Panel Data," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 485-501, September.
    11. Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(1), pages 98-116.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ilham Haouas & Almas Heshmati, 2015. "The Impact of Arab Spring on Hiring and Separation Rates in the Tunisian Labor Market," Working Papers 921, Economic Research Forum, revised Jun 2015.
    2. repec:ilo:ilowps:374452 is not listed on IDEAS
    3. Chama CHIPETA & Daniel Francois MEYER, 2018. "Trade Openness, FDI and Exchange Rate Effects on Job Creation in South Africa's Tradable Sectors," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 197-212.
    4. Justina A. V. Fischer, 2015. "Globalized Markets, Globalized Information, and Female Employment: Accounting for Regional Differences in 30 OECD Countries," AIEL Series in Labour Economics, in: Chiara Mussida & Francesco Pastore (ed.), Geographical Labor Market Imbalances, edition 127, chapter 0, pages 283-303, Springer.
    5. Almas Heshmati & Ilham Haouas & Kazi Sohag & Muhammad Shahbaz, 2017. "Hiring and Separation Rates Before and after the Arab Spring in the Tunisian Labour Market," South African Journal of Economics, Economic Society of South Africa, vol. 85(2), pages 259-278, June.
    6. Ilham Haouas & Mahmoud Yagoubib, 2007. "The effect of international trade on labour-demand elasticities: empirical evidence from Tunisia," Applied Economics Letters, Taylor & Francis Journals, vol. 15(4), pages 277-286.
    7. Ilham Haouas & Mahmoud Yagoubi, 2004. "Trade liberalization and demand labor elasticities : evidence from Tunisia," Documents de travail 94, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    8. repec:aer:wpaper:256 is not listed on IDEAS
    9. Haouas, Ilham & Yagoubi, Mahmoud, 2004. "Trade Liberalization and Labor-Demand Elasticities: Empirical Evidence from Tunisia," IZA Discussion Papers 1084, Institute of Labor Economics (IZA).
    10. Ngo, Thanh & Trinh, Hai Hong & Haouas, Ilham & Ullah, Subhan, 2022. "Examining the bidirectional nexus between financial development and green growth: International evidence through the roles of human capital and education expenditure," Resources Policy, Elsevier, vol. 79(C).
    11. Kyvik Nord°as, Hildegunn., 2005. "Labour implications of the textiles and clothing quota phase-out," ILO Working Papers 993744523402676, International Labour Organization.
    12. Ben Salha, Ousama, 2013. "Does economic globalization affect the level and volatility of labor demand by skill? New insights from the Tunisian manufacturing industries," Economic Systems, Elsevier, vol. 37(4), pages 572-597.
    13. Nordås, Hildegunn Kyvik, 2004. "Is trade liberalization a window of opportunity for women?," WTO Staff Working Papers ERSD-2003-03, World Trade Organization (WTO), Economic Research and Statistics Division.

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    More about this item

    Keywords

    International trade; Labour market; Manufacturing; Women;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F10 - International Economics - - Trade - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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