The Impact of Firm Downsizing on Workers: Evidence from Ethiopia’s Ready-Made Garment Industry

Working Paper
Published on 3 March 2022

A previous version of this paper was published on 28 September 2020.

Abstract

We analyze matched employee-employer data from Ethiopia’s largest special economic zone during a period of downsizing pressure from the COVID-19 world import demand shock. We observe substantial job displacement during the shock peak, particularly for new hires. These largely female and rural-to-urban migrants persistently “fall off the employment ladder,” remaining unemployed both within and outside the zone even after employers have recovered from the shock. We observe high levels of urban-centered food insecurity and depression symptoms during the crisis peak, regardless of employment status. Our findings highlight the importance of social protection policies within export-oriented development strategies.

Authors

Morgan Hardy

New York University, Abu Dhabi

Gisella Kagy

Vassar College

Eyoual Demeke

Policy Studies Institute

Marc Witte

University of Oxford

Christian Johannes Meyer

University of Oxford