Modelling Labour Market Adjustment to Trade Liberalisation in an Industrialising Economy

Chris Milner and Peter William Wright ()

Economic Journal, 1998, vol. 108, issue 447, pages 509-28

Abstract: This paper investigates labor-market responses to trade liberalization in an industrializing country. Short- and long-run responses of employment and wages are examined using a specific factor trade model, which underpins the empirical work. Employment and wage equations are estimated using dynamic panel techniques for importable and exportable sectors in Mauritius and for a period covering both the pre- and post-liberalization regimes. The empirical testing finds some support for the theoretical predictions of differential responses between sectors. Increases in female participation, however, appear to have dampened the adjustment burdens of liberalization on importables.

Date: 1998
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