Trade liberalisation and employment intensity of sectoral output growth: Lessons from Tunisia

Mohamed Goaied and Seifallah Sassi ()

The Economic and Labour Relations Review, 2015, vol. 26, issue 2, 261-275

Abstract: The purpose of this article is to assess the relationship between trade liberalisation in Tunisia and the employment intensity of sectoral output growth, in order to examine the claim that free trade creates jobs by stimulating growth. Using panel data for 15 Tunisian sectors over the period 1983–2010, we compare estimated sectoral output–employment elasticities prior to and following the Free Trade Agreement process with the European Union. The results provide evidence that trade liberalisation in Tunisia has led to an increase in the intensity of employment in exporting manufacturing sectors like textiles, clothing and leather industries, and mechanical and electrical industries. However, their ability to generate jobs in response to value-added growth remains weak. Conversely, since the Free Trade Agreement process, the most labour-intensive service sectors, notably tourism and miscellaneous services, have shown a significant decrease in the employment intensity of their output growth. Our findings suggest that the Free Trade Agreement with the European Union has not really fostered the shift of the Tunisian Economy towards a more inclusive model and support the argument for a reorientation of investment policy in favour of sectors generating more job opportunities.

Keywords: Employment intensity; jobless growth; panel data; sectoral output; trade liberalisation; Tunisia (search for similar items in EconPapers)
JEL-codes: C33 E24 J23 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ecolab:v:26:y:2015:i:2:p:261-275

DOI: 10.1177/1035304615579833

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