Female Earnings in the Apparel Industry Post-MFA: Evidence From Pakistan

Jabbar Ul-Haq,Hubert Visas,Seyedrohollah Ahmadi,Ahmed Raza Cheema

doi:10.1177/2158244020926554

Jabbar Ul-Haq, Hubert Visas + Show 2 more

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https://doi.org/10.1177/2158244020926554

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Abstract

One of the major worries vis-à-vis the phasing out of the multifiber arrangements (MFA)/agreement on textile and clothing (ATC) in 2005 was that the textile and apparel (T&A) production would shift from the developed to the developing countries and have significant impacts on particularly the female workers, as apparel is a female intensive sector in the world. We explore the effect of MFA/ATC on female laborer by examining the predictions of the theoretical model of Robertson and Trigueros-Argüello in the case of Pakistan. It predicts, based on the assumption that the T&A sector is female intensive, such that an adverse (beneficial) shock to product price will be transformed into a comparative decline (rise) in the T&A wages relative to other sectors in the short run (SR) and a relative drop in wages of female workers compared with wages of male workers across all sectors in the long-run (LR). Our empirical findings of the post-MFA/ATC variations support the predictions of the theoretical model.

Highlights

The multi-fiber arrangement (MFA/ATC) was the key policy regulating the textile and clothing (T&C) trade with the objective of helping industrialized economies adjust to the growing productive capacity of the developing economies
One worry about the phasing out of the multifiber arrangements (MFA)/ATC was that the textile and apparel (T&A) production would shift from the developed countries to the developing countries and have a significant impact on workers, the female because apparel is a female-intensive sector in the world
The T&A exports to the trading partners increased after the end of the MFA/ATC, and unit values declined initially due to rising competition, but it did not affect the volumes, instead volumes increased

Summary

Introduction

The multi-fiber arrangement (MFA/ATC) was the key policy regulating the textile and clothing (T&C) trade with the objective of helping industrialized economies adjust to the growing productive capacity of the developing economies. This arrangement was eliminated on January 1, 2005, and the quotas were no more in the textile and clothing trade. Market access was easy due to low capital requirement and relatively less-skilled workers and resulting in a competitive market This industry is the most protected industry, among all manufacturing industries in all economies of the world.

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