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

Author

Listed:
  • Haouas, Ilham

    (Abu Dhabi University)

  • Yagoubi, Mahmoud

    (University of Paris 1 Panthéon-Sorbonne)

  • Heshmati, Almas

    (Jönköping University)

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. 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.

Suggested Citation

  • Haouas, Ilham & Yagoubi, Mahmoud & Heshmati, Almas, 2003. "The Impacts of Trade Liberalization on Employment and Wages in Tunisian Industries," IZA Discussion Papers 688, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp688
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    References listed on IDEAS

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    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

    panel data; manufacturing; imports; exports; labour market; trade; Tunisia;
    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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