Do workers in exporting industries earn higher wages? Evidence from recent trade liberalisation episodes in two developing countries

Abstract

This paper explores wage adjustments in the Moroccan and Egyptian manufacturing sectors over recent periods of rapid trade openness and export promotion. By utilising successive rounds of labour survey data merged with trade variables that capture export orientation, import penetration and reduction of tariffs, the results indicate that trade liberalisation in form of lower tariffs in both countries, and greater export orientation in Egypt, lead to significant wage gains. Additionally there are interesting sector and gender differentials. In Morocco, only private enterprise workers gain, whereas public enterprise witnesses substantial reductions in wages due to liberalisation. In contrast, in Egypt both types of workers witnessed wage gains, and these were even greater for public enterprise workers. In both countries, there is evidence that increased competition from trade has also reduced discrimination against female workers. The paper concludes by noting the fragility of such gains, and suggesting the need for further policies to preserve them, in the aftermath of world economic and financial crisis.