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

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.

Does trade liberalization increase the formal-informal wage-gap in Pakistan?

“…Various researchers, including Attanasio, et al [13], Ferreira, et al [14], Galiani and Sanguinetti [15], Goldberg and Pavcnik [1], Hanson and Harrison [16], Kumar and Mishra [17], Lechthaler and Mileva [18], Ul-Haq, et al [19] and Ul-Haq, et al [20], have thoroughly investigated the impact of trade liberalization on wages. However, few studies, such as Aleman-Castilla [4] for Mexico; Matthew [21] for Nigeria; Paz [22] for Brazil; Ponczek and Ulyssea [5] for Brazil, have examined the influence of trade liberalization on the formal-informal wage differential.…”