Does Trade Promote Gender Wage Equity? Evidence from East Asia

Abstract

This study explores the impact of competition from international trade on the gender wage gap in Taiwan and South Korea between 1980 and 1999. The dynamic implications of Becker’s (1959) theory of discrimination lead one to expect that increased competition from international trade reduces the incentive for employers to discriminate against women. This effect should be more pronounced in concentrated sectors of the economy, where employers can use excess profits to cover the costs of discrimination. Alternatively, wage discrimination may increase with growing trade in a context of employment segregation that limits women’s ability to achieve wage gains. The empirical strategy controls for differences in market structure across industries in order to isolate the effect of competition from international trade. Estimation results are not consistent with Becker’s theory, as greater international competition in concentrated sectors is associated with larger wage gaps between men and women.