Subnational Level

BOX 3.1 Data Needed to Estimate Labor Market Effects of Trade Reforms at the Subnational Level

Analyzing the trade impact on local labor markets requires establishing a link between macro and micro statistics and simulation models. With the rapid expansion of statistical capacity in developing countries, a growing number of household surveys used to monitor poverty and labor outcomes can also provide reliable estimates of labor market outcomes at the subnational level, typically at the province or state level. Poverty and labor market effects can be drawn with confidence using these newer survey instruments. Using household surveys, for instance, the Global Data Laba provides global subnational development indicators.

Ultimately, the level of regional disaggregation at which a household survey can provide good subnational estimates depends on the design of its sampling framework. The variables required to develop this subnational disaggregation and information about the sampling framework are available in harmonized format in the Gender-Disaggregated Labor Database (GDLD)b which was constructed using World Bank collections of harmonized household surveys. Most of the surveys include information at the one-digit regional level (state level). Table 3A.1 in annex 3A shows that 71 surveys for developing countries identify regions at the one-digit level, 29 surveys contain variables at the two-digit level, and 13 surveys contain variables at the three-digit level.

It is possible to overcome the limitations of a survey sampling design by complementing the information in household surveys with census and external data using unit-level small area estimation techniques (Nguyen et al. 2018; Lange, Pape, and Putz 2018), the same techniques used to generate poverty maps.

a. For more on the Global Data Lab, see www.globaldatalab.org. b. For more on the Gender Disaggregated Labor Database, see http://datatopics.worldbank.org/gdld/.

Colombo, Gampaha, and Kalutara in the Western Province; Kurunegala and Puttalam in the Northwestern Province; and Kandy in the Central Province. The level of urbanization is higher in these districts than elsewhere, but trade- and transportation-related jobs are rather evenly spread out by district (except for Colombo and Gampaha, which account for a disproportionately higher share of workers), as are jobs in social services (education, health care, and domestic personnel). Most jobs in agriculture are found in districts outside of the Western, Northwestern, and Central Provinces.

What are the key findings?

GDP and international trade would expand faster with lower trade barriers.

Specifically, 10 years after liberalization, GDP would be expected to be about 2.8 percent higher than in the baseline, and exports would be up by 24 percent and imports by almost 19 percent. Thanks to trade facilitation, lower paratariffs and trade costs would lead to lower prices of inputs for producers and lower prices of imports for consumers, stimulating trade, growth, and a reallocation of resources to the most productive sectors. In the full reform scenario, workers would move out of agriculture and toward the textile and apparel sectors (figure 3.9). There would thus be a net increase in employment, compared to a decline under baseline conditions. As a result, trade policy reforms