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The impacts of trade liberalization on employment and wages in Tunisian industries

✍ Scribed by Ilham Haouas; Mahmoud Yagoubi; Almas Heshmati

Publisher
John Wiley and Sons
Year
2005
Tongue
English
Weight
476 KB
Volume
17
Category
Article
ISSN
0954-1748

No coin nor oath required. For personal study only.

✦ Synopsis

This paper investigates short and long-run effects of trade liberalization on employment and wages. Employment and wage equations are estimated using data for importable and exportable industrial sectors in Tunisia. Causality tests show that causality is unidirectional. Wages strongly causes employment. There is significant difference in the direction of effects in the short and long-run. Empirical results only support the shortrun theoretical predictions for the exportable sectors. 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. Employment at exportable sectors could therefore only rise if employment at importable fell. However, as we have seen, the supply of labour increased dramatically in Tunisia as women entered the labour market. This allowed employment at importable sectors to be maintained as the exportable sector expanded.

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