Earnings, Savings, and Job Satisfaction in a Labor-intensive Export Sector:
Evidence from the Cut Flower Industry in Ethiopia

Abstract:

While labor-intensive export-oriented industries typically bring positive economic benefits to countries through employment generation, the effects of these industries on various aspects of workers’ welfare have not been formally studied very well. This paper considers the case of the cut flower industry in Ethiopia to provide such quantitative evidences. Based on the propensity-score matching and doubly robust estimations to facilitate rigorous comparisons, we find that production workers in the cut flower sector earn significantly more than similar workers in other sectors, most probably due to the flower farms’ interest to reduce costly worker turnovers. In addition, the cut flower industry workers save more regularly than workers in other sectors who have similar characteristics, and the amount saved relative to the income level is also higher, after controlling for the frequency of wage payment and employment status. The subjective valuation of their jobs is also higher in the cut flower sector, particularly in terms of the income level, stability, and future prospect, but they are not necessarily more satisfied with the type of work they do. Risk-averse individuals are more satisfied in the cut flower sector and age is rewarded more, while work experience and math skills tend to reduce satisfaction levels more in the sector at this level of unskilled production workers.