The impact of trade liberalization on jobs and distribution
Maryla Maliszewska, World Bank
3rd Joint IMF-OECD-World Bank Conference on Structural Reforms September 25, 2020
A growing research and policy agenda • Increased availability of microdata and advances in methodological approaches reflected in research • The relevance for policy community reflected in numerous reports by the IFIs, including the forthcoming WB report in October 2020. • The challenges to further global integration and the role of trade during and post pandemic. Growing interest in academia…
Source: Artuc (2019)
… and in the policy community
Short and long-run labor market effects of developing country exports: Evidence from Bangladesh District level employment and wages between 2005-2015. Wages increase, and informality decreases in sub-districts more exposed to Bangladesh’s export shock (female-intensive ready-made garments), but effects dissipate quickly. The male-female wage gap closes considerably countrywide, not just in apparel. Comments 1. Big jump in prices and wages in 2010-2013 in Fig. 5b and Fig 9 and results in Table 2 show strongest impacts on wages over 2005-2010 2. Informality at 86% in 2015 3. Import competing industries and informality (Goldberg and Pavlick, 2003) 4. Policy environment to stimulate supply response 5. Safety and sustainability, linkages to diversification, lack of insurance, reshaping of GVCs post COVID
Long run effects of trade liberalization on local labor markets: Evidence from South Africa • Based on municipal-level data from South Africa for the period 1996-2011 finds that local labor markets more exposed to tariff cuts experienced slower growth in employment and income per capita, with stronger longer-term effects. Former homelands impacted more severely. Comments 1. Consistent with Erten et. el. (2019) with similar impacts on formal and informal employment in the tradable sector. 2. Sectoral composition matters. 3. Full pass through of tariff changes to the municipality level. 4. Trade reform contributed to export growth and diversification (Edwards and Lawrence, 2006). Reflect on constraints which prevented the growth of exports relative to other municipalities. 5. The poor benefited the most (Daniels and Edwards, 2006).
What gains and distributional implications result from trade liberalization: Evidence from Ecuador
• Based on the analysis of firm level data post WTO accession 1997-2007. Distinguishes between input and output tariffs. • Input tariff cuts lead to higher quality and new input varieties. Productivity of firms increases, with stronger impacts in the long run. Only partial pass through of gains to consumers due to higher markups. Skilled wages grow faster. • Output tariff cuts increase quality of final goods but have no significant impact on skilled wages or consumer prices. Comments 1. Export performance of firms? 2. The descriptive stats on differential impacts by sectors and location of firms. 3. Persistent gains over time (beyond 2-3 years) 4. Sensitivity of results wrt. differentiated inputs as in Luong (2011) 5. The role of complementary policies (NTBs, trade facilitation etc.).
Research agenda Issues • Integrated approach covering consumption and income channels to evaluate welfare implications • Distributional aspects of COVID, gender and localized implications • Better understanding of the distributional impacts of trade in services and global value chains (WDR, 2020) Better measurement/data • Trade costs beyond tariffs including regulatory measures, costs of crossing the border etc. • Data on informal sector (labor market and trade) • Gender and regional aspects. Recent data on wages and employment spit by gender in Gender Disaggregated Labor Database (GDLD)
http://datatopics.worldbank.org/gdld/