Trade Liberalization and Wage Inequality in the Philippines

Hasan, Rana; Jandoc, Karl Robert L.

doi:10.2139/ssrn.1632222

Cited by 4 publications

(3 citation statements)

References 10 publications

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“…According to earlier research, because of the effect of income from production factors, foreign trade has improved the income level of unskilled labourers in developing countries, which had advantages pertaining to labour endowment, thereby narrowing the income gap (Deardorff, 1982;Bhagwati & Srinivasan, 2002;Bhagwati, 2004). Regrettably, this theory was not supported by evidence from developing countries, particularly India (Kumar & Mishra, 2008), the Philippines (Hasan & Jandoc, 2010), and 17 countries in Latin America (Perry & Olarreaga, 2006). In those countries, the income gap was expanding instead of narrowing, during the greater foreign exposure era.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Haskel and Slaughter (2001) conducted empirical research on these aspects in England; While Bernard and Jensen (1997), and Ebenstein, Harrison, Margaret & Shannon (2009) conducted empirical research related to America. There are also some scholars who conducted this research on developing countries, like Mexico (Harrison & Hanson, 1999); Chile (Beyer, Rojas & Vergara, 1999); Columbia (Goldberg & Pavcnik, 2007) and the Phillipines (Hasan & Jandoc, 2010). Research on foreign trade for both developing and developed countries indicates that foreign trade has had an effect on the income gap, from the perspective of industry, region and the individual.…”

Section: Introductionmentioning

confidence: 99%

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Trade structure, trade mode and the urban-rural income gap in China

Hao

Guo

2013

SAJEMS

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This paper analyses the effect of foreign trade in China on the urban-rural income gap from certain angles including trade scale, trade structure and trade mode at the national and provincial levels. The empirical results indicate that, from the perspective of trade scale, the export and import in the eastern and national regions have an expansion effect on the urban-rural income gap, and, in the central regions, they have a reduction effect. Furthermore, export in the western regions has a reduction effect while import in these regions did not have a significant effect. From the perspective of trade structure, the trade of high-tech products and labour-intensive products in the national and eastern regions has an expansion effect, and the trade of the above-mentioned products in the central regions has a reduction effect. The trade of labour-intensive products in the western regions has a reduction effect, and that of high-tech products an expansion effect. From the perspective of trade mode, processing trade and general trade in the national and eastern regions have an expansion effect, while in the central regions they have a reduction effect. General trade in the western regions would expand the urban-rural income gap, and processing trade does not have a significant effect. Consequently, when the South African Government is working out trade multiplicative and corresponding policy, they should consider the development of foreign trade and should pay attention to the labour market structure.

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Section: Literature Reviewmentioning

confidence: 98%

Section: Introductionmentioning

confidence: 99%

Trade structure, trade mode and the urban-rural income gap in China

Hao

Guo

2013

SAJEMS

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“…A wide array of empirical studies have explored the effects of globalization's various facets on income inequality, including trade (Hasan and Jandoc, 2010), structural adjustment (Lim and Montes, 2000), and premature deindustrialization (Tuaño and Cruz, 2019). More limited, however, are studies on the effects specifically of flexible employment arrangements on incomes, with the exception of Nguyen, Nguyen-Huu, and Le (2016) who identified a significant gap between wages of permanent and non-regular workers in Asian labor markets, including the Philippines.…”

Section: Introductionmentioning

confidence: 99%

Labor flexibility in the Philippines

Joy Llagas Galunan

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Globalization intensified competitive pressures among developing economies as indiscriminate openness to trade and capital flows exposed many labor markets to greater volatility.In efforts to attract foreign capital investments, fulfill structural adjustment programs of international financial institutions and promote the interests of dominant factions of domestic capitalists, many developing economies reconfigured existing regulatory frameworks to incorporate flexible labor arrangements which are highly vulnerable to social and economic precarity.Short-term contracts and labor outsourcing have deepened structural inequalities in labor markets while obstructing access to collective bargaining, skills development, and wage growth. As such, the prevalence of labor flexibility in many countries historically excluded workers from the gains of economic growth.The institutionalization of labor flexibility in the Philippines demonstrates this historical exclusion, as GDP growth at an unprecedented rate of 6.5% from 2010 to 2017 occurred while the labor market employed 30% of the labor force in short-term and outsourced labor contracts. The study traces the development of labor flexibility in the Philippines by examining transformations in its political economy. In its globalization period from 1970 to 2010, the institutionalization of labor flexibility in the Philippines served three functions: (1) as a source of competitive advantage in the quest for foreign capital investments on the national level, (2) as a local labor control regime for key developing regions on the subnational level, and (3) as an available adjustment apparatus for economic sectors with externally-sourced demand.For the growth period of 2010 to 2017, the further entrenchment of these functions is examined within the context of services-led growth. The study demonstrates that increased employment and productivity in services sectors with high rates of growth, i.e. retail trade, business processing, and real estate sectors entailed the employment of more workers under precarious short-term and outsourced contracts with persistently unequal and stagnant wage growth. Thus, the study challenges neoclassical and new institutionalist claims that growth from integration and economic upgrading will generally translate into better working conditions.

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