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.


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.


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