Trade Liberalization and Labor Demand Elasticities: Evidence from Tunisia

This paper investigates the effects of trade liberalization on labor demand elasticities. Employment demand equation is estimated by using data (1971-1996) for manufacturing industries in Tunisia. Results from empirical testing using the model find a weak support for the idea assuming that trade liberalization will lead to an increase in labor demand elasticities: in the vast majority of the industries we consider, we cannot reject the hypothesis of no relationship between trade openness and labor-demand elasticities. This weakness of labor demand elasticity in practice is perhaps explained by the tight labor market regulations in place during the 1987-96. However, our results are robust to the type of labor considered (contract labor and permanent labor). This supports the conclusion that under liberalization period labor markets have become more flexible, and that employers prefer recruiting contracts worker. Résumé: Libéralisation commerciale et élasticités de la demande de travail: Le cas de la Tunisie Ce papier étudie les effets de la libéralisation des échanges sur les élasticités de la demande du travail. Une équation de demande d’emploi est estimée en se fondant sur des données (1971-1996) portant sur six industries manufacturières tunisiennes. Les résultats des tests économétriques ne vérifient pas l’idée que l