Regional economic communities and labour market outcomes: The case of Africa

Abstract

We examine the differences in employment and wage outcomes among firms from countries with membership in at least two Regional Economic Communities (RECs) in comparison to firms from countries with membership in one REC. We use a pooled OLS estimation strategy on the World Bank Enterprise Survey dataset of manufacturing firms in Africa. The results indicate that firms from countries with membership in at least two RECs are associated with higher wages and lower employment growth in comparison to firms from countries with membership in one REC. Further, firms from countries with membership in Common Market for Eastern and Southern Africa (COMESA) and Economic Community of West African States (ECOWAS) are associated with an increase in both wages and employment growth. With the recent ratification of the African Continental Free Trade Area (AfCFTA), our results show that AfCFTA should draw key facets of COMESA and ECOWAS in order to induce an increase in both wages and employment growth in Africa.