Consequences of trade liberalization on the labor market in developing economy: The case of Tunisia

Ilham Haouas () and Mahmoud Yagoubi
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Mahmoud Yagoubi: Crifes-Matisse - University of Paris 1

Documents de travail from Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV

Abstract: This paper investigates short and long run effects of trade liberalization on employment and wages using a specific factor trade model. Employment and wage equations areestimated using data (1971-1996) for importable and exportable sectors in Tunisia. Results fromempirical testing using the model find some supports for the theoretical predictions of Edwards(1988) for the exportable sector. On the other hand, in the importable sectors, we find resultsthat are opposed to those predicted by Edwards (1988) since employment and wages increase. Apossible reason for the divergence of theory and practice is that the Edward's model is premisedon the basis of a fixed supply of labour. Exportable employment could therefore only rise ifimportable employment fell. However, as we have seen, the supply of labour increaseddramatically in Tunisia as women entered the labour market. This allowed employment inimportable to be maintained (even slightly increase) as the exportable sector expanded.

JEL-codes: F14 F43 J30 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2001-10
New Economics Papers: this item is included in nep-afr
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Persistent link: https://EconPapers.repec.org/RePEc:mon:ceddtr:64

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