Short and Long-Run Labor Market Effects of Developing Country Exports: Evidence from Bangladesh

44 Pages Posted: 30 Mar 2020

See all articles by Raymond Robertson

Raymond Robertson

Texas A&M University

Deeksha Kokas

World Bank

Diego Cardozo

University of Chicago

Gladys Lopez-Acevedo

Lead Economist

Multiple version iconThere are 2 versions of this paper

Abstract

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, we instrument export demand with OECD imports to ensure identification. We compare 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, we find 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. We show 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.

Keywords: local labor markets, Bangladesh, apparel, exports, wage inequality, Stolper-Samuelson

JEL Classification: F13, F14, F15, F16, J23, J31, O15, O19

Suggested Citation

Robertson, Raymond and Kokas, Deeksha and Cardozo, Diego and Lopez-Acevedo, Gladys, Short and Long-Run Labor Market Effects of Developing Country Exports: Evidence from Bangladesh. IZA Discussion Paper No. 13041, Available at SSRN: https://ssrn.com/abstract=3562831

Raymond Robertson (Contact Author)

Texas A&M University ( email )

TAMU 4220
1004 George Bush Dr West
College Station, TX 77843
United States

Deeksha Kokas

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Diego Cardozo

University of Chicago

1101 East 58th Street
Chicago, IL 60637
United States

Gladys Lopez-Acevedo

Lead Economist ( email )

1818 H Street
Washington, DC 20433
United States

HOME PAGE: http://www.worldbank.org/en/about/people/gladys-lopez-acevedo

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
6
Abstract Views
145
PlumX Metrics