Trade Liberalization, Wages and Work Environment Nexus-Evidences from Pakistan.pdf

1、
　　Pakistan has experienced drastic trade liberalization during 1988 to 2005 accompanied with remarkable event of the gradual elimination of the MFA/ATC (i.e. 1995-2005). This liberalization (defined as reduction in p

2、rotections and elimination of quantitative restrictions (i.e. MFA/ATC phasing-out)) has direct and indirect effects on labor markets. There is no conclusive evidence in empirical research on the effects of liberalization

3、 on wages，employment and working conditions. We investigated the impact of liberalization on industry wage premia，wage inequality and working conditions in the case of Pakistan.
　　The present study investigated the i

4、mpact of drastic 1988‘s liberalizing trade reforms in Pakistan on industry wage premia. We adopted estimation strategy which uses dispersion in sector wage premiums and trade reforms over time and across sectors. In cons

5、istent to previous empirical studies on less developed economies，we found a positive，strong and robust association among variation in trade reforms and variation in sector wage premia over liberalization episode (i.e. 19

6、90-2005). Our findings are consistent with short-run and medium-run trade models where workers are immobile among industries or，on the other hand，with the presence of sector rents which are decreased by liberalizing trad

7、e policy. We further found rising wage differentials between skilled and unskilled workers as a result of liberalization episode.We tested the simple theoretical model developed by Robertson and Trigueros-Argüello (2011

8、)in the case of Pakistan.It predicts,based on the assumption that T&A sector is female intensive,that an adverse (beneficial)shock toproduct price will transform into a relative decline (rise) in the textile and apparel

9、wages relative to other sectors in the short-run (SR)and a relative drop in wages of female workers compared to wages of male workers across all sectors in the long-run (LR).Our empirical findings of the post MFA/ATC var

10、iations support the predictions of the theoretical model in the case of Pakistan. We found that the impact of the elimination of the MFA/ATC on working environment of workers of the textile and apparel sector is posi

11、tive and statistically significant.The working conditions of workers in textile and apparel sector improved as compared to other sectors.While female‘s workingconditions deteriorated in relation to male and compared with

12、 other industries.Our findings are robust and are not sensitive to different combinationsofcontrols.We also controlled for provincial heterogeneity,the results showedminor correction in magnitude but sign remains same an

13、d statistically significant.We also addressed treated selection bias that is common phenomena ofnon-random observational studies by performing Propensity Score analysis.Wefound similar results from Propensity score analy