DP11694 | Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies

Publication Date

12/07/2016

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Abstract

Policy reforms targeting the services sectors influence the process of structural transformation and economic development. This paper used sector-level panel data for 24 transition economies for the 1990-2012 period to analyze the impacts of services policy reforms on employment in downstream manufacturing sectors. We find that negative effects on manufacturing employment are mitigated or disappear for countries with better economic governance and higher levels of human capital. The decline in manufacturing employment is observed only in the first decade of transition. The estimated negative effect of policy reforms is of a contemporaneous nature; it does not persist along the lag structure.