Trade and Employment From Myths to Facts - International Labour ...

Trade and Employment: From Myths to Facts
to 50 per cent in 1997 (Majumder-Paul and Begum, 2000). When differences in
worker skills are controlled for, the female-male wage ratio that was fairly high in
1991–95 (95 per cent) declined (to between 72 and 80 per cent) by 2006 (Bhattacharya,
Khatun, Moazzem, Rahman and Shahrin, 2008). In China, the discriminatory portion
of the gender wage gap also widened in the 1990s (Maurer-Fazio et al., 1999). In
2008, 40 per cent of the gender wage gap among migrant workers in China was attributable
to discriminatory treatment (ILO, 2010).
2) Does trade competition reduce gender wage gaps?
Studies that examine Becker’s hypothesis, on the other hand, have generally not
found support for the argument that trade competition undermines gender wage discrimination,
i.e. the gender wage differencial among equally skilled workers. 9
Oostendorp’s cross-country analysis of gender wage gaps at the detailed occupational
level does not find evidence for the effect of trade (or foreign direct investment) in
low- or lower-middle income countries during the 1983–99 period (Oostendorp,
2009). 10
In one of the first studies to test the open-economy version of Becker’s hypothesis,
Black and Brainerd (2004) find that, in the US during the 1976–93 period, import
expansion contributed to decline in wage discrimination in less competitive manufacturing
industries. They attribute this favourable impact of trade to firms’ cost-cutting
measures, including cutting rents paid to male workers. 11 However, this study does
not shed light on the direction and magnitude of changes in women’s and men’s
earnings and changes in their employment levels that underlie the narrowing of
gender wage gaps. A re-examination of the “importing equality” hypothesis shows
that import competition in the US during this period reduced gender wage gaps via
decline in the relative demand for less-skilled production workers in concentrated industries
where women workers experienced heavier job losses (Kongar, 2007). It was
the departure of low-skilled women workers, rather than the decline in wage discrimination
against women workers, that increased average female wages and narrowed
the gender wage gap.
Mexico provides mixed evidence depending on the export sector and the period
under consideration. Trade liberalization over the 1987–99 period was associated with
9 This empirical strategy has high data demands that impede its widespread application. Genderdifferentiated
data on individual worker characteristics – such as education, work experience – are
necessary to isolate the wage differentials that arise from productivity differentials from those that
cannot be explained (“the residuals”), which are usually attributed to discrimination.
10 Oostendorp (2009) used the ILO October Inquiry data for 161 detailed occupations and 83
countries. He infers discrimination if average wages of men and women differ in the same narrowlydefined
occupation where skills are relatively homogeneous.
11 The dependent variable in this model is the residual wage gap – the portion of the wage gap that
cannot be explained by observed productivity differences between women and men. The key
independent variable is the interaction term between trade share of output and domestic industrial
concentration by industry. Domestic concentration by industry and trade share by industry and
year serve as control variables.
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