Short and Long-Run Labor Market Effects of Developing Country Exports : Evidence from Bangladesh
This paper studies how a positive export shock -- the sharp increase in garment-sector exports that began at the end of the Multifibre Arrangement (MFA) -- spread through Bangladesh's labor markets. Although the end of the MFA was arguably exo...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/545471583761343054/Short-and-Long-Run-Labor-Market-Effects-of-Developing-Country-Exports-Evidence-from-Bangladesh http://hdl.handle.net/10986/33425 |
| Summary: | This paper studies how a positive export
shock -- the sharp increase in garment-sector exports that
began at the end of the Multifibre Arrangement (MFA) --
spread through Bangladesh's labor markets. Although the
end of the MFA was arguably exogenous to Bangladesh, the
authors instrument export demand with OECD imports to ensure
identification. The paper compares estimates of the local
labor market effects (wages and informality) and estimates
from wage equations that reflect the predictions from
long-run, general-equilibrium neoclassical trade theory. As
in other studies, this paper finds that the export shock was
localized both in terms of sector and geography. Wages
increased and informality decreased in sub-districts more
exposed to the export shock. Unlike in other studies, these
local labor market effects dissipate quickly. Furthermore,
Bangladesh's export shock was sector specific, limited
predominantly to the female-intensive garment and textile
sector. The paper shows that, following the increase in
exports of the female-intensive good, the male-female wage
gap closes considerably throughout the country -- not just
in the apparel sector. In relatively small Bangladesh, the
national labor market seems to be more integrated compared
to larger countries studied, possibly suggesting that labor
adjustment costs are lower in smaller countries. |
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