examines the changes in induced demand resulting from trade through supply chain linkages and finds an even more pronounced impact on labor force participation. Furthermore, Acemoglu et al. (2016) demonstrate that inter-industry linkages amplify the employment effects of trade shocks, doubling the size of the impact within manufacturing and producing a similarly substantial employment effect outside manufacturing. This emerging literature emphasizes the importance of indirect impacts from trade shocks but has yet to address the effects of export shocks, particularly in developing countries.

Few studies have exclusively focused on the impact of trade on service jobs. For example, Eliasson, Hansson, and Lindvert (2012) utilize data from Sweden in the mid-1900s and find that increased competition from low-wage countries abroad has a considerable impact on the creation of skilled jobs and the displacement of less skilled jobs in the tradable sector. In a more comparable setting, Mitra (2011) investigates a similar question based on India but only identifies negligible results regarding the direct and indirect effects of exports and imports on employment. These findings hold true for both formal and informal services.

This study extends this scant literature by studying the impact of export expansion on local labor market outcomes using a supply chain perspective, in a lower-middle income country such as Egypt. To the best of our knowledge, there is only one study in the literature that directly does so, by Goutam et al. (2018), who look at the impact of export-induced demand, mapped through input-output linkages, in Bangladesh on four types of employment: formal, casual, unpaid, and self-employment. They find a larger impact of trade when accounting for spillover or indirect effects. We differ from this work by focusing on not just employment but a range of labor market outcomes.

It is important to highlight that this work is an extension of Robertson, Vergara, Kokas and Acevedo (2021) who use the Bartik (1991) estimates to analyze if higher exports generated better local labor market outcomes in Egypt between 2009 and 2017. Their results suggest that that trade does impact labor market outcomes in the short run, but the effects quickly dissipate throughout the country and remain statistically insignificant for most types of workers. In this paper, we use the same methodological framework but now account for indirect effects through supply chain linkages.

# **3. Database and Measurement**

The aim of the paper is to assess the total impact of export expansion on local labor market outcomes in Egypt accounting for supply chain linkages, exploiting variation in export expansion across kizms and markaz, between 2007 and 2018. To this effect, we combine export data from UNCOMTRADE data, input-output coefficient matrix, and information on local labor market outcomes using the databases and techniques described below.

Labor Force Data and Descriptive Statistics Our main source of labor market data is the labor force survey (LFS) provided by Economic Research Forum, and available for years between 2007 and 2018, and implemented every 1-2 years. The LFS surveys are detailed individual level surveys and collect information in a host of areas including key labor market characteristics, household characteristics, and individual