The present study investigates the impact of trade on employment of skilled and unskilled workers in large scale manufacturing industries of Pakistan. We used dynamic panel data models (i.e. system-GMM and difference GMM) for 18 industries from 1970 to 2006. Empirical results show that trade liberalization has negative impact on employment of both production and non-production workers. The negative impact of trade may be attributed to low mobility of labor because of rigidity of labor markets as well as to the high protection given to most of the inefficient industries in the past.
