Working papers

This study attempts to assess the effect of Global Value Chains (GVCs) and service liberalisation on skill-upgrading. It provides a bridge between two active literatures on GVCs and service liberalisation. Using comprehensive firm-level data from the World Bank Enterprise Survey, the contribution of this paper is twofold. First, it focusses on the effect of GVC integration on skill-upgrading in the presence of service restrictions. Second, it uses firm-level data on 141 developing economies. Our main findings suggest that integration in GVCs results in skill-upgrading, whilst service trade restrictions are associated with skill-downgrading. We argue that more restricted services weaken the channels by which GVCs stimulate the process of skill-upgrading. Therefore, skill-upgrading resulting from GVC participation is more pronounced when services are liberalised. Our results remain robust to any change in the measure of service protection, the measure of skill-upgrading and when we allow for the endogeneity of GVCs.

After more than two decades of trade liberalisation, faced with deep structural problems, which were exacerbated by the 2008 financial crisis and culminated in the 2011 Spring Revolution and change of government, in 2016 Egypt started to protect some sectors from foreign competition. This paper assesses how tariff reforms during the 1998-2018 period affected the Egyptian labour market, by focussing on real wages and job stability (i.e. having a permanent position). The empirical analysis is carried out on worker-level data from the available four waves of Egyptian Labour Market Panel Survey (ELMPS), including the recently released 2018 wave. We find that higher tariff protection tends to deteriorate labour market conditions, both lowering real wages and decreasing the probability of finding a stable job. Furthermore, tariff changes show remarkable asymmetries. There is a negative and significant correlation between tariff increases and real wages, whilst the positive impact of tariff reductions turns out to be negligible and insignificant. Our findings support the view that, in Egypt, protectionism hampered working conditions, contributing to inequality, whilst liberalisation produced minor average effects.