Exports to Jobs

South Asia has grown fast and poverty has fallen across most countries in the region. The performance has been less impressive on the exports front. Despite labor costs increasing in China, India and its neighbors have yet to become a global manufacturing hub for labor-intensive products. And growth has not done enough to match the fast-growing working-age population, leading to lingering concerns about jobless growth and poor job quality. While self-employment and casual wage work are buoyant, the deficit is particularly severe in relation to regular wage employment. Could a greater export orientation in South Asia result in better labor market outcomes? To answer this question, this study rigorously estimates the potential impact from increasing South Asian exports per worker on wage employment and on labor earnings. The study is one of the few to estimate the effects of exports on local labor market outcomes. The results suggest that increasing exports per worker would result in higher wages and lower casual work (reduction of informality). Wage growth for less-educated workers is found to be smaller than that for more educated workers; smaller for women than for men; and smaller for less-experienced workers than for more-experienced ones. However, women and less skilled workers would experience the largest reductions in informality, probably because they are currently on the margins of the labor force. The main implication of the report is that increasing exports per worker would have significantly positive labor market implications for South Asian workers. However, complementary policies would amplify the positive effects. Those policies should focus on investing in skills, removing distortions in the allocation of inputs, and facilitating female employment in manufacturing.