Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments

Alfons Palangkaraya and Jongsay Yong

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: We use unpublished establishment level data of Australian manufacturing from 1993-94 and 1996-97 censuses to study how trade liberalisation affects productivity. More specifically, we use the variation in the extent of trade liberalisation across four digit ANZSIC manufacturing industries classification to identify the link between trade liberalisation and three outcomes: establishments’ probability of exit, the change in the size of output and the change in employment. There is weak evidence that establishments in industries with greater reductions in effective rate of assistance are more likely to exit. We find strong evidence that they reduce employment. There is no evidence for economies of scale through output expansion. Together these indicate that the documented productivity gains of trade liberalisation may come more from the pro-competitive effects which forces establishments to reduce their slackness rather than from the exit of less efficient establishments.

Keywords: Agglomeration; Australian Manufacturing; Industry assistance; Trade liberalisation; Entry and exit. (search for similar items in EconPapers)
JEL-codes: R11 R12 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-05
New Economics Papers: this item is included in nep-ent and nep-int
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Related works:
Journal Article: Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments (2011)
Working Paper: Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2007n16

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