IFS/STICERD/UCL Development Work in Progress Seminar
Trade-displaced or trade-stuck? Self-employment, gendered outside options, and trade shock adaptation
Romaine Loubes (LSE)
Thursday 30 May 2024 13:00 - 14:00
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About this event
Do trade shocks still displace workers when they are self-employed and thus have decision-making power over job exit? The answer matters for low-income countries, where self-employment rates are highest. In this paper, I study an import tariff shock affecting self-employed retailers in Rwanda using censuses of formal and informal establishments and job-level data. Workers exposed to the shock do not leave their jobs despite sizeable hourly earnings decreases. Instead, they implement specific adjustment strategies like reallocating hours across multiple jobs. I rationalize these novel responses into a model of time allocation with multiple job holdings. It predicts that reallocation depends on the quality of outside employment options, which I test by examining gender heterogeneity, after showing that women retailers have worse outside options than men. Consistently, while men shift hours away from affected jobs toward other paid occupations, women abandon other jobs to increase hours at the affected job and face persistent negative income effects. Exploratory results indicate that this heterogeneity could stem from intra-household differences in access to spouses' unpaid productive work. Although self-employment protects workers from trade-driven displacement, it keeps the most vulnerable groups stuck in declining sectors, making trade adjustment assistance crucial.
This seminar series is jointly organized by the IFS, STICERD, and UCL.
IFS/STICERD/UCL Development Economics Work In Progress seminars are held on Thursdays in term time at 14:00-15:00, at the IFS, unless specified otherwise.
Seminar organisers: Oriana Bandiera (STICERD, LSE), Imran Rasul (UCL), Britta Augsburg (IFS) and Jonathan Weigel (LSE).
For further information please contact Britta Augsburg: britta_a@ifs.org.uk.
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