Javed Iqbal, Misbah Nosheen


Traditional HOS theorem postulates a re-distribution of
employment from import competing sector towards export oriented
sector with free trade. In order to test this theory for Paksitan, this
study investigates the impact of trade on employment and wages of
export oriented and import competing industries while using time
seres data over 1970-71 to 2005-06 and a cross section of 5 export
oriented and 13 import competing industries For estimation purpose,
we have used GMM approach. Empirial results show that trade
liberalization has a positive impact on employment and wage of both
export oriented and import competing industries. The results are
robust to different measures of liberalization.

Full Text:



Abuka, Charles A. (2005). “An Empirical Analysis of Impact of Trade

on Productivity in South Africa’s Manufacturing Sector,”

PhD dissertation, University of Pretoria.

Arellano, M. and Bond, S. (1991). “Some Tests of Specification for

Panel Data: Monte Carlo Evidence and an Application to

Employment Equations”Review of Economic Studies, Vol.

Banga, R. (2005). “Liberalization and Wage Inequality in India”,

Council for Research on International Economic Relations

ICRIER. Working Paper No. 156.

Baum, C. F., Mark E. Schaffer; and Steven Stillman. (2003).

“Instrumental Variables and GMM: Estimation and Testing”,

Boston College Working Paper no. 545. Chestnut Hill, Mass.: Boston


Blundell, R, and Stephen B. (1998).”Initial Conditions and Moment

Restrictions in Dynamic Panel Data Models”,Journal of

Econometrics 87, no. 1: 115–43.

Belman, D. and T. M. Lee. (1996). “International Trade and the

Performance of U.S. Labor Markets, in U.S”, Trade Policy

and Global Growth: New Directions in the International

Economy, edited by Robert A. Blecker. M.E. Sharpe.

Beaulieu, E. (2000). “The Canada-U.S. Free Trade Agreement and

Labour Market Adjustment in Canada”,Canadian Journal

of Economics, Vol. 33(2), pp. 540-63.

David Greenaway & Robert Hine & Peter Wright, (2000). “Further

evidence on the effect of foreign competition on industry

level wages”, Review of World Economics



Trade and Labor Market Outcomes: Evidence

(WeltwirtschaftlichesArchiv), Springer, vol. 136(3), pages

-538, 09

Edwards, L. and R.Z. Lawrence. (2010). “US Trade and Wages: The

Misleading Implications of Conventional Trade Theory”,

NBER Working Paper, No. 16106, forthcoming in Rising

Tide: Is Growth in Emerging Markets Good for the United

States?, Peterson Institute for International Economics,


Gaston, N. and Trefler, D. (1997). “The Labour Market Consequences

of the Canada–US Free Trade Agreement”, Canadian Journal

of Economics 30(1): 18-41.

Grotkowska, G. (2005). “Impact of International Trade on Employment

in Polish industrial sector”, (

index.php?n=Main.RS0506w (Accessed on 1-1-2009).

Giovannetti B. and Menezes-Filho N. (2006).”Trade Liberalization

andDemand for Skill in Brazil”, IBMEC Working Paper –

WPE, September, 2006

Hasan, R. (2001). “Impact of Trade and Labor Market Regulations

on Employment and Wage: Evidence from Developing

Countries”, East-West Working Papers No.32.

Hasan, R., Mitra D. and K.V. Ramaswamy (2007).”Trade Reforms, Labor

Regulations and Labor-Demand Elasticities: Empirical

Evidence From India”,Review of Economics and Statistics,

(3): 466-81.

Helpman, E., O. I. M. Muendler and S. R. (2012).”Trade and Inequality:

Fro Theory to Estimation”, NBER Working Paper, 17991.

Hoekman, B. and Winters, A. (2005). “Trade and Employment: Stylized

Facts and Research Findings”, Policy Research Working

Paper 3676, Washington, DC: World Bank.



Trade and Labor Market Outcomes: Evidence

Hine, Chris R., Wright, P. W., (1998). “Trade with Low Wage Economies,

Employment and Productivity in UK Manufacturing”,The

Economic Journal, Vol. 108, 1500-1510.

Iqbal, J. and Nosheen M. (2008).”Impact of Trade Liberalization on

Wages and Employment in Large scale Manufacturing

Industries of Pakistan”, paper presented in the conference

of International Islamic University(IIUI), Islamabadwith the

collaboration of HEC and published as conference

proceedings . 24p. 331.2 INT (75814

Iqbal, J.Mahmood, Z. and Nosheen M. (2012).”How do Wages and

Employment Adjust to Trade Liberalization? A Case of

Pakistan”, Journal of Business & Economics,Vol 4. No. 1

Iqbal, J.Nosheen M and MehmoodTahir (2014).”Economic Impact

of Trade Liberalization: The case of Pakistan’s

Manufacturing Industrial Market”, FWU Journal of Social

Sciences, Vol. 8, No.2

Khan, A. H., (1998). “The Expereince of Trade Liberalization in

Pakistan”,The Pakistan Development Review, 37: 4 Part II

Winter 1998 pp. 37:4,661-685.

Kien, T. N. and Yoon H. (2009).”Impacts of Trade Liberalization on

Employment in Vietnam: A System Generalized Method of

Moments Estimation”,The Developing Economies 47, no.

: 81–103.

Krishna, P., Jennifer P. P., and Mine Z. S. (2012). “Trade, Labor

Market Frictions, and Residual Wage Inequality across

Worker Groups”, American Economic Review, 102(3): 417-



Trade and Labor Market Outcomes: Evidence

Lee, Eddy (2005). “Trade Liberalization and Employment,’ DESA

Working Paper No.5. (

/wp5_2005.pdf (Accessed on 01-01-2014).

Naqvi,S. N. Hand Kemal, A.R. (1991).”Protectionism and Efficiency

in Manufacturings: a case study of Pakistan”, A copublication

of International Center for Economic Growth

and Pakistan Institute of Development Economics, ICS

Press San Francisco, California.

Nickell, S. 1981. “Biases in Dynamic Models with Fixed

Effects”,Econometrica49, no. 6: 1417–26.

Revenga, A. (1992). “Exporting Jobs: The Impact of Import

Competition on Employment and Wages in U.S.

Manufacturing”, Quarterly Journal of Economics, 107:


Revenga, A., (1997). “Employment and Wage Effects of Trade

Liberalization: The Case of Mexican Manufacturing”, Journal

of Labor Economics, Vol. 13, No. 3, Part 2, pp. S20-43.

Riihimaki, E., (2005). “Economic Integration and the Elasticities of

Labor Demand: Econometric Evidence from Finland”,

HECER Discussion Paper No. 46 , University of Helsinki.

Slaughter, M.J. (2001). “International trade and labor-demand

elasticities”, Journal of International Economics, 54, 27-56.

Yasin, M. (2007).”Trade Liberalization and Its Impact on the Relative

Wage and Employment of Unskilled Workers in the United

States”, Southwestern Economic Reviews, 34(1), 89-101.

Wood, A. (1997). “Openness and Wage Inequality in Developing

Countries: the Latin American Challenge to East Asian



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.