Trade Shocks and Labour Adjustment: Evidence from Pakistan’s Manufacturing Industries

Javed Iqbal, Misbah Nosheen, Syed Nawab Haider Naqvi


The present study is an attempt to explore the impact of trade
liberalisation on employment and wages of production and non-production
workers in large scale manufacturing industries of Pakistan. We use a
sample of 18 industrial establishments with a time series data covering
a period 1970-71 to 2005-06. In order to account for endogeniety
problem, this study uses the Generalised Method of Moments (GMM). The
study comes up with the findings that trade liberalisation has
significantly negative impact on employment of both production and
non-production workers. On the other hand, trade liberalisation has a
significantly positive impact on wages of production workers, but it has
no significant impact on wages of non-production workers. The negative
impact of trade is attributed to the high protection given to most of
the inefficient industries in the post liberalisation period. On the
other hand, reduction in non-production worker employment is not
unexpected as in case of developing country like Pakistan, trade
liberalisation is supposed to displace capital intensive industries that
employ most of the non-production (skilled) workers. Keywords:
Production Worker, Non-production Workers, Trade, Employment,

Full Text:




  • There are currently no refbacks.