Gender Wage Gaps across Skills and Trade Openness

Several empirical studies have shown that the effect of openness on the gender wage gap depends on the skill requirement of the workplace. This paper offers a theoretical explanation to understand that finding. We integrate a statistical discrimination framework with the labour assignment approach to give general conditions under which the matching between firms and workers gives rise to a wider gender wage gap at the upper tail of the distribution, in accordance with empirical evidence. We further look at the effect of trade openness on the gender wage gap along the entire distribution. Workers' characteristics vary in two dimensions, skills and job commitment. The inability to observe individual's job commitment induces employers to base partly their decision on group average. Following the literature on labour and international trade, we assume that skills act as complements to technological upgrading. Exporting firms are more skill-intensive and pay higher wages ; assuming further that worker's job commitment is a complement to technological upgrading, we find that a reduction in trade costs increases wage inequality within-groups and has non-monotonic effects on between-group inequality. Trade openness reduces the gender wage gap among unskilled workers but increases the gender wage gap among high-skill workers

Formal but less equal : gender wage gaps in formal and informal jobs in Brazil

In developing countries, a large share of employees work informally and are not covered by employment protection legislation. I study here how gender wage inequality differs across formal and informal jobs in Brazil. The raw gender wage gap is higher in informal jobs (13%) compared to formal jobs (5%), but I show that this difference is an artefact of different male and female selection processes. First, women have better observable characteristics than men and the female advantage is stronger among formal employees. Second, men and women entering formal and informal jobs have different unobservable characteristics. Controlling for endogenous selection into formal vs. informal jobs, I find that the gender gap in wage offers is high and increases with education in formal jobs. In informal jobs, however, estimated wage offers are the same for men and women. I discuss the potential implications of these findings regarding the effect of labour market regulation on gender wage gaps

Gender wage discrimination and trade openness : prejudiced employers in an open industry

I introduce taste-based discrimination in a trade model with imperfect competition and provide an explanation for the heterogeneous effects of international trade on the gender wage gap within sectors. Firms operate in an oligopoly where prejudiced employers can use their rents to pay men a premium in line with Becker’s theory. On one hand, import competition reduces local rents and with them the average gender wage gap in sectors that were sheltered from competition prior to trade liberalization. On the other hand, easier access to foreign markets can increase domestic firms’ profits and enable discriminatory firms to maintain wage gaps. Evidence from the Uruguayan trade liberalisation supports the empirical relevance of the taste-based discrimination mechanism at the sectoral level

Gender Wage Discrimination and Trade Openness

Abstract This paper introduces employer taste-discrimination in an open economy model with imperfect competition and endogenous gender wage gap. Firms operate in an oligopoly where rents are positive and prejudiced employers can use their market power to pay men a premium, in line with Becker's theory. Trade openness affects employers' ability to discriminate. However the direction of the impact depends on trade partners' characteristics, in particular their competitive advantage. While penetration of foreign firms in the domestic market triggers a surge in competition thus heightening incentives to reduce costs, an easier access to foreign markets is an opportunity to enhance profits and may increase discrimination. The model is confronted with data for Uruguayan manufacturing sectors that experienced a sharp liberalization of trade in the 1990s. Market access of Uruguayan firms as well as competitors' access to the Uruguayan market, at the industry level, are used for the first time to assess the impact of trade openness on the gender wage gap in a specification inspired by the theoretical analysis

Gender, informal employment and trade liberalization in Mexico

We study how trade liberalization affects formal employment across gender. We propose a theoretical mechanism to explain how male and female formal employment shares can respond differently to trade liberalization through labor reallocation across tradable and non-tradable sectors. Using Mexican data over the period 1993-2001, we find that tariff cuts increase the probability of working formally for both men and women within 4-digit manufacturing industries. The formalization of jobs within tradable sectors is driven by large firms. Constructing a regional tariff measure, we find that regional exposure to trade liberalization increases the probability of working formally in the manufacturing sector for both men and women, and especially for men. However in the service sectors, the probability of working formally decreases for low-skilled women

Working from home and Covid-19: the chances and risks for gender gaps

As the Covid-19 pandemic causes an all-time high share of people to work from home, this disruptive event is likely to have a long-lasting effect on work arrangements. Given existing research on the effects of working from home (WfH) on hours worked and wages, an increased availability of WfH may provide a chance for women to catch up with their male counterparts. Yet, the need to simultaneously care for children during the Covid-19 lockdown may also revive traditional gender roles, potentially counteracting such gains. This expert brief discusses the likely effects of the Covid-19 pandemic on gender gaps in light of recent empirical findings and novel statistics on the heterogeneous structure of work arrangements among couples