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Trade and Employment: From Myths to Facts 5.3 THE GENDER IMPACTS OF TRADE ON EMPLOYMENT AND WAGES 5.3.1 Theoretical approaches Within neoclassical (mainstream) economic theory, two arguments predict genderequitable effects of trade liberalization and expansion in developing countries: the standard international trade theory (Hecksher-Ohlin-Stolper-Samuelson) and Gary Becker’s theory of labour market discrimination. According to standard international trade theory, countries that specialize in production and trade based on their relatively abundant factor endowment will benefit from trade. Free trade in this case is expected to bring about increase in demand for the relatively abundant type of labour – relatively less-skilled labour in developing countries and relatively skilled labour in industrial economies. Sustained expansion of demand for the relatively abundant factor, in turn, is predicted to induce an increase in its relative return. To the extent that women workers predominate in less-skilled jobs in both developing and industrial economies, this theory predicts employment gains for women in export sectors of developing countries and employment losses for women in industrial countries. In developing countries, women workers are expected to see a rise in their wages relative to men in skilled jobs and a decline in the gender wage gap. Conversely, for industrial economies, disproportionate job losses for unskilled workers (women), and a widening wage gap between skilled (men) and unskilled (women) labour are expected. 5 According to a recent interpretation of Becker’s theory of labour market discrimination, a similar demand-induced dynamic toward greater gender equity is expected to ensue from increased competition generated by trade expansion (Becker, 1971; Black and Brainerd, 2004). Becker’s theory predicts decline in labour market discrimination in response to increasing competition in product markets. These effects are more likely to be observed in concentrated industries since more competitive industries are already expected to have less or no discrimination against women workers. In this framework, women workers are assumed to be equally skilled/productive as male workers, hence the term “discrimination”. The theory conceptualizes discrimination as a cost to the firm, which pays a wage differential that is higher than the marginal product of labour (“rent”) to male workers. In the open economy context, the prediction is that import competition will discipline firms in concentrated industries and help reduce the gender wage differential via erosion of rents to male workers and an expansion in the relative demand for female labour. 5 The restrictive assumptions of the theory – two-good, two-country world economy with no market imperfections, full employment – do not allow consideration of the interdependence between domestic sectors and the likely adjustments whereby the job losses for unskilled workers (women) in the manufacturing sector could be compensated by expanding opportunities in services. 178
Chapter 5: Gender aspects of trade By contrast, non-neoclassical (heterodox) approaches do not predict genderequitable effects of trade expansion (Albelda et al., 2004). In this approach, wages and access to jobs are determined by the relative bargaining power of groups of workers, which are shaped by both worker skills and job characteristics. Heterodox labour market analyses do not explicitly address impacts of international trade but they conceive of the employment adjustments that ensue as a source of intensified competition among groups of workers to secure good jobs. In the case of import expansion, for example, job competition among workers in import-competing industries is likely to adversely affect wages of workers who are in a weaker position in terms of their skill levels, seniority or sector of employment. Thus, women workers may bear the brunt of job losses, have limited access to the newly created higher-paying jobs and may experience slower wage growth relative to men. When exports expand, on the other hand, women workers may experience job gains but not necessarily decline in wage discrimination, since discrimination is viewed as a routine feature of the economy. Specifically, labour market discrimination is both an adaptation to the prevailing gender norms in society, which shape occupational distribution and wage levels, and a conscious employer strategy to boost profits. The predictions of the two neoclassical theories for developing countries are consistent: trade expansion sets off a process of closing of gender wage gaps that is associated with the increase in demand for women workers and the downward pressure on labour costs. The heterodox approach, premised as it is on the power differences between groups of workers and workers vis-à-vis employers, is less optimistic about the ability of women workers to gain ground in closing the gender wage gaps or otherwise improving working conditions, even if they gain access to new jobs. 5.3.2 Empirical evidence: Global feminization of employment A major feature of the late twentieth century process of global integration has been the rapid incorporation of women in export sectors producing manufactured goods, agricultural products and services such as tourism and data processing (Mehra and Gammage, 1999). This trend has been referred to as “global feminization of labour,” where often a double meaning is invoked: the increase in women’s share of employment and the spread of conditions of employment – part-time, temporary work with low pay and no or limited benefits – which traditionally characterized jobs held by women (Standing, 1989, 1999). The positive correlation between export orientation and female intensity of manufacturing employment has been confirmed by several studies and has become a stylized fact in the development economics literature (Özler, 2007; Seguino, 2000). The structural adjustment programmes of the 1980s and 1990s, which heightened job and income insecurity among workers, also boosted employment growth in export sectors. Job losses of men in import-substituting industries subject to increasing import competition likely reinforced the feminization process as they 179
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Trade and Employment From Myths to
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Trade and Employment From Myths to
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PREFACE Trade negotiations -bilater
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Trade and Employment: From Myths to
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EDITORS AND CONTRIBUTORS EDITORS Ma
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ACKNOWLEDGEMENTS The editors wish t
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NEW EVIDENCE ON TRADE AND EMPLOYMEN
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Chapter 2: New evidence on trade an
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Region Annualized percentage change
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Region 1980 1985 1990 1995 2000 200
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Figure 2.4.b: Long-run association
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20 See Harrison and Rodriguez-Clare
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ASSESSING THE IMPACT OF TRADE ON EM
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APPPENDIX 3.A: TABLES Chapter 3: As
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TRADE AND THE INFORMAL ECONOMY 4.1
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