Authors
Brian McCaig, Margaret S McMillan
Publication date
2020
Journal
Journal of African Economies
Description
We study the effects of domestic trade liberalisation on labour markets in Botswana. South Africa is the dominant member of the Southern Africa Customs Union. As such, when South Africa liberalised trade in the 1990s, this induced large and plausibly exogenous tariff reductions for the other customs union members, including Botswana. Using labour force surveys from Botswana spanning a decade, we find that trade liberalisation did not affect the relative size of industries in terms of employment. However, trade liberalisation had effects within industries. We find an increase in the prevalence of working in an informal firm and self-employment, but mixed evidence of effects on unemployment. Hours worked decreased in response to trade liberalisation, partially driven by the movement of workers to informal firms. Despite large increases in aggregate income, trade liberalisation is associated with a reduction in …
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