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This paper studies the effect of firms' export activity on the gender wage gap among its workers. Using matched employer-employee data from Germany for the period between 1993 and 2007, we show that an increase in a firm's export widens the wage gap between male and female blue-collar workers, while it reduces it between male and female white collars. In particular, the former effect is stronger for workers in routine manual tasks, while the latter is driven by employees performing interactive tasks. This evidence is consistent with the hypothesis that serving foreign markets relies more on interpersonal skills, which reinforces female comparative advantage and reduces (widens) the gender wage gap in white-collar (blue-collar) occupations. Our results, identified out of the variation in wages within firm-worker pairs, are robust to controlling for a series of worker and firm characteristics, and a host of firm, sector, time and state fixed effects, and heterogeneous trends.
In this paper we study the link between globalization of firms and gender inequality. Specifically, we examine how the need for interpersonal contacts in trade and gender-specific differences in negotiations are related to the gender wage gap. Our key finding is that export of goods that are intensive in interpersonal contacts widens the gender wage gap. The effect is robust across various specifications and is most pronounced for domestic exporting firms, which do not trade within multinational corporations but with external foreign partners, where the contracting problem is most distinct. We ascribe this result to a male comparative advantage in bargaining.
Are the wage gains from exports specific to exporting industries, or do they dissipate throughout the economy? In the language of trade theory, are the benefits from exporting industry specific or factor specific? To analyze this question, we study the case of Bangladesh. Bangladesh was the 4th largest apparel supplier to the United States market in 2020. Recent studies show the positive impact of apparel exports on female labor force participation in the formal labor market and a range of household decisions. We extend this literature by estimating the relationship between apparel exports and the male-female wage gap surrounding an exogenous policy change in the European Union that corresponded to a discrete increase in apparel-export unit values. We find that the increase in prices is associated with increases in women's wages that go beyond the apparel sector. The economy-wide male-female wage gap for less-educated workers in Bangladesh dropped by more than half with the increase in apparel export prices, consistent with trade theory, and that the change estimated with a cross-section IV approach matches simulation results of a simple heterogenous firm comparative advantage (HFCA) model. Our findings are not driven by either changing minimum wage levels (that are not binding for apparel in Bangladesh) or other changes through time, and are robust to incorporating input-output table data to account for the contributions of non-traded industries to export markets.
We examine whether exposure to gender inequality at export destinations a↵ects the gender wage gap in exporting firms. We motivate the analysis through a stylized model where wages depend on worker productivity, and men have a comparative advantage when trading with gender-unequal countries due to customer discrimination. Empirically, we use high-quality matched employer- employee data from Sweden and calculate how exposed firms are to country-level gender inequality through their export destinations. Although increased export intensity on average leads to a wider within-firm gender wage gap, the e↵ect is entirely driven by trade with gender-unequal countries; we find no impact on the gender wage gap when firms increase their exports to countries with gender-equality levels close to that of Sweden. Female managers, who are most likely to interact with foreign customers, experience the most pronounced negative relative wage e↵ects.
This thesis comprises four self-contained papers that rely on applied micro-econometric methods to understand which factors are important in shaping the gender wage gap in globalized firms and how firms innovate when exposed to trade-induced shocks.?In the first paper, we study how the within-firm gender wage gap in Sweden is affected by the degree of gender inequality in the home country of foreign investors. The results suggest that gender norms of the home country matter-the wage gap between men and women in foreign-owned subsidiaries appears to increase with the degree of gender inequality prevailing in the investors' home market.?The second paper aims to improve our understanding of how exports and the associated need for communication with foreign partners affect the gender wage gap. Our key finding is that exports of goods that are intensive in interpersonal contacts widen the gender wage gap. The negative wage effect is robust across various specifications and is most pronounced for domestic exporting firms, which mainly deal with external contractors. We ascribe this result to a male comparative advantage in bargaining-a skill that is especially needed and rewarded when serving foreign markets, where contracting problems manifest themselves.?In the third paper, we examine whether exposure to gender inequality at export destinations (in the form of customer discrimination) impacts the gender wage gap in exporting firms. Relying on high-quality matched employer-employee data from Sweden, we demonstrate that exports to gender-unequal destinations increase the within-firm gender wage gap. We find the most pronounced negative wage impacts for female managers, who appear to be particularly exposed to the gender inequality of export partners.?In the fourth paper, I explore how exposure to import competition across different geographical aggregations alters the innovation activity of firms in the manufacturing sector. Using detailed geographical information on the location of manufacturing producers in Sweden, I analyze whether increased competitive pressure from abroad triggers a different response in innovation at the national, local labor market, and municipality levels. By exploiting exogenous shocks in the foreign export supply of intermediate manufacturing goods, I find the most pronounced effects at the lowest levels of geographical aggregation, which are consistently negative across different innovation metrics.
This study explores the impact of competition from international trade on wage discrimination by sex in two highly open economies. If discrimination is costly, as posited in neoclassical theory based on Becker (1959), then increased industry competitiveness from international trade reduces the incentive for employers to discriminate against women. Alternatively, increased international trade may contribute to employment segregation and reduced bargaining power for women to achieve wage gains. The approach centers on comparing the impact of international trade on wage discrimination in concentrated and nonconcentrated sectors. The effect of international trade competition is expected to be more pronounced in concentrated sectors, where employers can use excess profits in the absence of trade to cover the costs of discrimination. Wage discrimination is proxied by the portion of the wage gap that cannot be explained by observable skill differences between men and women. The empirical model is estimated using a rich panel data set of residual wage gaps, trade ratios, and alternative measures of domestic concentration for Taiwan (China) and the Republic of Korea during the 1980s and 1990s. Results indicate that in contrast to the implications of neoclassical theory, competition from foreign trade in concentrated industries is positively associated with wage discrimination. These results imply that concerted efforts to enforce equal pay legislation and apply effective equal opportunity legislation are crucial for ensuring that women's pay gains will match those of men in a competitive environment. This paper--a product of the Gender Division, Poverty Reduction and Economic Management Network--is part of a larger effort in the network to understand the impact of trade on labor markets.
Trade can dramatically improve women’s lives, creating new jobs, enhancing consumer choices, and increasing women’s bargaining power in society. It can also lead to job losses and a concentration of work in low-skilled employment. Given the complexity and specificity of the relationship between trade and gender, it is essential to assess the potential impact of trade policy on both women and men and to develop appropriate, evidence-based policies to ensure that trade helps to enhance opportunities for all. Research on gender equality and trade has been constrained by limited data and a lack of understanding of the connections among the economic roles that women play as workers, consumers, and decision makers. Building on new analyses and new sex-disaggregated data, Women and Trade: The Role of Trade in Promoting Gender Equality aims to advance the understanding of the relationship between trade and gender equality and to identify a series of opportunities through which trade can improve the lives of women.
Standing at 24% in 2018, India's female labour force participation is only half of the global average (48%). At the same time, India has one of the widest gender wage gaps in the world and women are less likely to be employed in the formal sector compared to men. This study focuses on the role of international trade as a source of increased competitive pressure in domestic markets, and how it affects relative wages and formal employment between men and women. Using the Revealed Symmetrical Comparative Advantage index, sectors of comparative advantage and disadvantage are identified and matched on Indian labour force surveys that contain information on sectoral employment and earnings. We find that sectors of comparative advantage in services have the lowest gender wage gap, with women earning 24% less than their male counterpart, while women in manufacturing earned on average 40% less than male workers. The Oaxaca-Blinder decomposition shows that the total gender wage gap in sectors of comparative advantage in services are minor while it is quite substantial in manufacturing, regardless of the comparative advantage. The study concludes that trade goes hand in hand with a smaller gender wage gap in the services sectors as it allows women to leverage their skills better than in manufacturing.