TheWorld Bank M a y PREMnotes 2 0 0 4 n u m b e r 8 6 Gender The impact of international trade on gender equality Do women benefit from expansions in international trade? This note reviews the growing evidence on this issue. Does trade improve prospects for women's in Egypt and by eight times in Mauritius. More employment and promote greater gender recent examples include Bangladesh and equality in wages? Trade creates or expands Madagascar, both of which have recently some activities and destroys or diminishes oth- developed export-oriented textile and gar- ers. If an individual works in an expanding ment industries. In Bangladesh, about 2 mil- sector or is able to switch to one, she or he is lion jobs had been created in the garment Trade increases likely to benefit. Evidence shows that trade industry by 1998, of which two-thirds were tends to increase the availability of wage jobs held by women (Paul-Mazumdar and Begum the availability for women, particularly in export sectors. But 2000). In Madagascar, women accounted for certain factors--such as discrimination, lower three-quarters of the country's nearly 140,000 of wage jobs skills, and gender inequalities in access to textile and apparel workers in 1999 (Nicita resources--may impede women's ability to and Razzaz 2003). for women, benefit from trade expansion. Some of these Women employed in export-oriented man- factors may be especially prevalent among ufacturing typically earn more than they particularly in female farmers in Sub-Saharan Africa. would have in traditional sectors. Many of these women had never earned cash income export sectors Does trade create jobs for women? before. In the above-mentioned study of Trade expansion typically results in an increase Madagascar, 85 percent of the women who in labor-intensive exports from developing found new employment in the textile sec- countries. Production of many of these exports tor had never directly received any monetary requires manual dexterity and stamina but not income, compared with 15 percent of new great physical strength. Employers in these male entrants. industries often prefer to hire women, and the Women also experience other benefits when growth of exports such as garments, shoes, jew- they earn cash income. For example, a study elry, and electronics has almost always been that followed 50 rural families in Mexico for accompanied by a significant increase in female 20 years found that a significant proportion of wage employment in the formal sector. the women reported an improvement in their A study of 35 developing countries found "quality of life," due mainly to their income a strong positive correlation between the from working outside their homes, including female intensity of manufacturing (the num- in (export-oriented) factory jobs (Gladwin and ber of female workers per 100 male workers) Thompson 1995). Further, cash income earned and export growth (Wood 1991). In most of by women may improve their status and bar- these countries, the female intensity of man- gaining power in the family. An example of ufacturing increased between the early 1960s this can be seen in Ecuador, where the devel- and mid-1980s. In some countries it increased opment of the export-oriented flower indus- dramatically--for example, by nearly five times try provided paid employment to large from the development economics vice presidency and povert y reduction and economic management network numbers of rural women. A study comparing What is the evidence on gender household time allocation patterns between wage gaps? a region that produces flowers and one that A cross-country study that investigated the does not found that in the former region, mar- impact of trade on the gender wage gap sug- ried men with working wives spent twice as gests that within occupations, increasing trade much time on housework as did similar men in most cases is associated with narrowing gen- in the region that did not produce flowers der wage gaps (Oostendorp 2004). (An excep- (Newman 2002). The study tests and con- tion is found for high-skill occupations in cludes that women gained bargaining power poorer countries, where there is no evidence as a result of their access to regular wage that trade has a narrowing impact.) Insofar as employment and were thus able to influence skills tend to be relatively homogeneous within The impact the degree of their husbands' contributions narrowly defined occupations, the narrowing to household work. of the gender wage gap can be seen as evi- of trade on the dence that there is less labor market discrim- How does trade affect gender ination as trade increases. gender wage wage gaps? Some country-level analyses support the The impact of trade on the gender wage gap hypothesis that trade reduces discrimination, gap depends depends on the relative magnitude of sev- while others do not. A study by Black and eral opposing effects. The gender wage gap Brainerd (2002) used U.S. data to test whether on the relative may be reduced because trade, like domes- increased openness in the period 1977­94 tic deregulation, can increase competition induced employers to reduce discrimination magnitude of among firms. The resulting pressure to cut against women, by estimating the differential costs can result in less discrimination against effect of increased imports on concentrated several opposing women with comparable skills to men, and versus competitive industries. The results therefore greater equality in wages. This showed that, after controlling for skills, the effects effect may be particularly strong in indus- gender wage gap narrowed more rapidly in tries where market concentration was ini- concentrated industries than in competitive tially high--that is, in industries dominated industries. Applying the same methodology, by a few firms. similar but less significant results were obtained Trade often results in a premium on skills. by Artecona and Cunningham (2002) for Mex- The resulting increase in the wage gap ico for the period 1987­93. Berik and others between skilled and unskilled workers may (2003), on the other hand, found the oppo- increase the gender wage gap, given that in site effect for the Republic of Korea and most countries the average man has a higher Taiwan (China), that is, an increase in inter- level of labor market skills than does the aver- national competitiveness between 1980 and age woman. (Note that most research suggests 1999 in concentrated industries was associ- that skill-biased technological change rather ated with a widening of the gender wage gap. than trade per se is the most influential fac- In Korea and Taiwan (China), discrimination tor determining changes in the skill premium. actually increased in concentrated industries But such technological change often takes exposed to competition. place through trade and capital market inte- These country-level studies also explore gration; Greenaway and Nelson 2000.) whether trade affects the gender wage gap Unskilled workers are often employed on unfavorably, by increasing the wage gap a temporary basis. Women's lack of skills rel- between skilled and unskilled workers. ative to men increases the likelihood that Although two of the studies find a negative they are employed as temporary workers, (widening) effect on the gender wage gap, with little ability to negotiate wages or work the results are not convincing because of conditions. A large influx of unskilled methodological issues. women workers into the labor force, caused Data from Madagascar illustrate the effects by the expansion of export industries, may of skills and the nature of employment on exert downward pressure on their wages. women's wages relative to men's (Nicita and PREMnote 86 May 2004 Razzaz 2003). In 1999, about 70 percent of Table 1 Estimated wage increases (percent) in Madagas- male workers had permanent, skilled posi- car's textile and apparel industry, 1997­99 tions, while only about 50 percent of female Type of employee Share of labor force Wage increase workers did. Table 1 shows the estimated wage Skilled males 18 34 increases obtained by different gender/skill Skilled females 37 23 groups during 1997­99, a period when ex- Unskilled males 7 11 ports increased. Skilled male workers (con- Unskilled females 38 0 stituting 18 percent of employees) and skilled Source: Nicita and Razzaz 2003. female workers (37 percent) received sig- nificant wage increases; they were also likely headed, and most of the labor of tea picking to have held permanent positions. The wages is done by women and girls (Bevan and oth- of unskilled male workers (7 percent of ers 1989). At the same time, an additional employees) increased much less, and those adult female in an otherwise average house- of unskilled women (38 percent) did not hold raised the propensity to adopt tea grow- increase at all. This last group is likely to have ing by one-quarter. The authors do not been comprised largely of temporary work- explore the underlying reasons for these ers who were therefore unable to negotiate seemingly contradictory results, but it seems wage increases. likely that labor shortages in female-headed Women also experience more churning-- households (which generally are smaller than that is, more frequent hiring, firing, and average), and their inferior access to land, relocation from one job to another. A study extension, and credit may have constrained of Chile covering a period of rapid adjust- them from adopting tea cultivation. ment, including trade liberalization, shows Similar effects have been observed even that firms tend to lay off a slightly higher when non-export cash crops have been intro- proportion of female workers when busi- duced. For example, a study of an irrigated ness declines and to hire more women rice project in Cameroon found that rice was when business recovers (Levinsohn 1999). considered a "male" crop. Any income gen- Female employees also had significantly erated by it was controlled by men, even if higher job relocation rates, a result also the crop was produced by women. Conse- found in a study of Turkey (Ozler 2001). quently, few married women entered into These studies illustrate the precarious rice cultivation and instead continued to nature of women's jobs in the manufac- grow sorghum despite its lower returns turing sector, with frequent spells of unem- (Jones 1983). ployment and a reduced ability to negotiate wages and working conditions. Policy implications Policymakers need to consider a broad range Do gender inequalities in access of issues unrelated to trade if both women to resources limit women's and men--and the economy as a whole-- opportunities? are to reap the full benefits of trade expan- An important institutional determinant of sion. These include skills acquisition, a women's gains from trade, particularly in nondiscriminatory labor market, and unem- agriculture, is the extent of their control ployment benefits. over land, labor, and the additional income Women's education and skill accumula- generated by a switch to export crops. Stud- tion are the most important factors deter- ies show that such effects may be of impor- mining the impact of trade on women's tance in Sub-Saharan Africa. employment and the gender wage gap. As For instance, in Kenya, between 1975­82, long as women remain less qualified than female-headed households had only half the men, they are likely to remain in lower- propensity of male-headed households to paying, less secure jobs, even if better-paying adopt tea growing--even though nearly one- jobs become available through trade expan- third of rural households were female- sion. Education and skills also provide greater PREMnote 86 May 2004 flexibility and power to negotiate wages and Theoretic Approach." American Journal of other work conditions. Agricultural Economics 65 (5). Enactment and enforcement of anti- Levinsohn, J. 1999. "Employment Responses discrimination laws are also critical as wage to International Liberalization in Chile." discrimination often persists with trade Journal of International Economics 47. expansion. Newman, C. 2002. "Gender, Time Use and Providing social protection for the poor, Change: The Impact of the Cut Flower including those who might experience unem- Industry in Ecuador." The World Bank Eco- ployment or lower wages due to frequent job nomic Review 16 (3). turnover, is another issue to address. Nicita, A., and S. Razzaz. 2003. "Who Ben- In Sub-Saharan Africa, an important issue efits and How Much? How Gender Affects Policy needs to is how to enhance female farmers' control Welfare Impacts of a Booming Textile over resources so that they can share the Industry." Policy Research Working Paper focus on women's benefits from trade expansion. 3029. World Bank, Washington, D.C. Oostendorp, R. H. 2004. "Globalization and skill accumulation, Further reading the Gender Wage Gap." Policy Research Artecona, R., and W. Cunningham. 2002. Working Paper 3256. World Bank, Wash- a nondiscriminatory "Effects of Trade Liberalization on the Gen- ington, D.C. der Gap in Mexico." Policy Research Report Ozler, S., 2001. "Export Led Industrializa- labor market, and on Gender and Development, Working tion and Gender Differences in Job Cre- Paper 21. World Bank, Washington, D.C. ation and Destruction: Microevidence unemployment Berik, G., Y. van der Meulen Rodgers, and J. from Turkish Manufacturing Sector." Uni- Zveglich Jr. 2003. "International Trade and versity of California at Los Angeles. benefits Wage Discrimination: Evidence from East Paul-Mazumdar, P., and A. Begum. 2002. Asia." Policy Research Working Paper 3111. "The Gender Imbalances in the Export World Bank, Washington, D.C. Oriented Garment Industry in Bangla- Bevan, D., P. Collier, and J. W. Gunning. desh." Policy Research Report on Gender 1989. Peasants and Governments: An Eco- and Development, Working Paper 12. nomic Analysis. Oxford: Clarendon Press. World Bank, Washington, D.C. Black, S., and E. Brainerd. 2002. "Importing Wood, A., 1991. "North-South Trade and Inequality? The Impact of Globalization Female Labor in Manufacturing: An on Gender Discrimination" Discussion Asymmetry." Journal of Development Stud- Paper 3532. Center for Economic Policy ies 27 (2). Research, London. Gladwin, C. H., and C. M. Thompson. 1995. This note was written by Gurushri Swamy (Con- "Impacts of Mexico's Trade Openness on sultant, Gender Unit, PREM) under the super- Mexican Rural Women." American Jour- vision of Susan Razzaz and Nayantara Mukerji. nal of Agricultural Economics 77. The author thanks Ihsan Ajwad, Alessandro Greenaway, D., and D. R. Nelson. 2000. "The Nicita, Marcelo Olarreaga, Karen Mason, and Assessment: Globalization and Labor Mar- Cecilia Valdivieso for useful comments. ket Adjustment." Oxford Review of Economic If you are interested in similar topics, consider Policy 16. joining the Gender and Development Thematic Jones, C. 1983. "The Mobilization of Women's Group. Contact Wendy Wakeman (x33994) or Labor for Cash Crop Production: A Game click on Thematic Groups on PREMnet. This note series is intended to summarize good practices and key policy findings on PREM-related topics. The views expressed in the notes are those of the authors and do not necessarily reflect those of the World Bank. 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