Does Trade Liberalization Increase the Labor Demand Elasticities? Evidence from Pakistan

Abstract

This study measure the linkage of trade liberalization and labor demand elasticities. Using Pakistan firm-level data, spanning the course of trade liberalization, study try to determine whether the trade liberalization increase the own price labor demand elasticities in the manufacturing sector of Pakistan. Elasticities are measure for production workers and non-production workers for major eleven industries at individual level at first and later elasticities are measured by pooling data across the industries at aggregate level. However, in most of the industries, study unable to find any empirical support for the hypothesis of no relationship between trade liberalization and labor demand elasticities in case of Pakistan