Exchange rate movements and manufacturing employment in Tunisia: Do different categories of firms react similarly?

Based on a micro-level dataset composed of 548 firms operating in Tunisian manufacturing industries, we examine the effects of exchange rates on employment over the period 1997–2002. The estimation of a dynamic employment equation using the system GMM technique suggests that employment positively responds to the depreciation of effective exchange rates and bilateral exchange rates vis-à-vis the Euro and the US dollar. Moreover, the different elasticities of employment to exchange rates vary according to specific characteristics of firms such as the ownership structure, the international exposure, the size and the industries to which they belong. Finally, using different measures of volatility, we confirm that the exchange rate volatility significantly lowers the employment level in all categories of firms. © 2015, Springer Science+Business Media New York.