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The effect of international trade on labour-demand elasticities: empirical evidence from Tunisia

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  • Ilham Haouas
  • Mahmoud Yagoubib

Abstract

This paper investigates the effects of trade liberalization on labour demand elasticities. The employment demand equation is estimated by using data for manufacturing industries in Tunisia covering the period from 1971 to 1996. The empirical results suggest a weak support for the idea assuming that trade liberalization will lead to an increase in labour demand elasticities: in the vast majority of industries considered, we cannot reject the hypothesis of no relationship between trade openness and labour-demand elasticities. This weakness of labour demand elasticity in practice is perhaps explained by the tight labour market regulations in place during the 1987-1996. However, these results are robust to the type of labour considered (contract labour and permanent labour). This supports the conclusion that under liberalization labour markets have become more flexible, and that employers prefer recruiting contract workers.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:apeclt:v:15:y:2007:i:4:p:277-286
    DOI: 10.1080/13504850500390325
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    References listed on IDEAS

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    1. Luca Papi & Alberto Zazzaro, 2000. "How Does the EU Agenda Influence Economies outside the EU? The Case of Tunisia," Development Working Papers 148, Centro Studi Luca d'Agliano, University of Milano.
    2. Robert C. Feenstra & Gordon H. Hanson, "undated". "Productivity Measurement And The Impact Of Trade And Technology On Wages: Estimates For The U.S., 1972-1990," Department of Economics 97-17, California Davis - Department of Economics.
    3. Ilham Haouas & Mahmoud Yagoubi & Almas Heshmati, 2005. "The impacts of trade liberalization on employment and wages in Tunisian industries," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(4), pages 527-551.
    4. Matthew J. Slaughter, 1997. "International Trade and Labor-Demand Elasticities," NBER Working Papers 6262, National Bureau of Economic Research, Inc.
    5. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
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    Cited by:

    1. Ludo Cuyvers & Emmanuel Dhyne & Reth Soeng, 2010. "The effects of internationalisation on domestic labour demand by skills : Firm-level evidence for Belgium," Working Paper Research 206, National Bank of Belgium.

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