# **2 Review of Existing Studies**

Since the early examples of the United Kingdom and the United States, industrialization and, more specifically, the textile sector, has been considered as a gateway to economic development. Garment and apparel manufacturing provide job opportunities for the low-skilled and contrary to other sectors, it enhances the labor participation and other labor outcomes of women (Keane and te Velde, 2008; Fukunishi, Murayama, Yamagata, and Nishiura, 2006; Yamagata, 2009; Fukunishi and Yamagata, 2013). Most of the studies that have analyzed the benefits of an expanding garment sector have indeed focused on the labor market outcomes of their workers. Several quantitative studies have shown the existence of a wage premium for garment and apparel workers, while qualitative studies have analyzed the non-wage working conditions of workers (Kotikula, Pournik, and Robertson, 2015). Robertson, Brown, Pierre, and Sanchez-Puerta (2009) report the existence of a wage premium in the garment sector in four out of five country-cases (Honduras, Cambodia, El Salvador, Madagascar; the exception being Indonesia) and indicate that the larger the foreign direct investment in the sector, the larger the wage premium. Interestingly, the highest wage premium reported for all countries corresponds to Cambodia, standing at around 35 percent. Similarly, Lopez-Acevedo and Robertson (2012) explore how apparel exports, employment, and wages changed after the end of the MFA in 2005 for various countries. As expected, the results vary by country: total employment and wage premium increased in Bangladesh, India, Pakistan and Vietnam, while they declined for Sri Lanka, Honduras and Mexico. For Cambodia, the end of the MFA resulted in a 20 percent increase of total employment while the garment wage premium declined, although it recovered in the following years.

In the specific case of Cambodia, Savchenko and Lopez-Acevedo (2012) use the Cambodia SocioEconomic data and Mincer wage equations to determine that the garment sector premium was around 28 percent during the 2004-2009 period. Similarly, they conclude that the expansion of the garment sector coincided with a narrowing of the gender wage gap in the country, supporting the hypothesis that this sector is beneficial for female unskilled workers. Finally, they find that the phasing out of the MFA negatively affected the working conditions in the garment sector, as measured by an average index of no-child labor and no-mandatory or unpaid overtime work. Similarly, Kotikula, Pournik, and Robertson (2015) report that amongst the workers employed in garment factories, there is no statistically significant difference between the self-reported wages of female and male workers, despite the fact that women are often concentrated among the lower-skilled occupations (such as sewer). In other words, they conclude that there is no gender wage gap within the garment industry, contrary to what is observed in other economic sectors.

However, few rigorous studies have explored how the benefits of the garment sector extend beyond labor market outcomes. In the case of Cambodia, Kotikula, Pournik, and Robertson (2015) present some summary statistics indicating that poverty in households that are not associated with the garment sector is slightly higher than in household that are, but there is no further analysis. Similarly, they present some evidence that a girl whose mother works in the garment sector has higher chance to attend school compared to a girl whose mother works in comparable sectors. This paper is closer to De Hoyos, Bussolo, and N ́u ̃nez (2012) and Heath and Mobarak (2015), who carefully analyze the welfare implications of 6