Abstract
In this chapter, we present a tractable general equilibrium model that can capture the effects of fragmentation on the wedge between male and female workers when the costs of adjustment differ. We identify formal conditions under which fragmentation widens the gender gap in wages in the presence of a higher cost of adjustment in the import-competing sector(s). In effect, we demonstrate the sensitivity of the effects of fragmentation, on the gap between male and female workers, to asymmetries in costs of adjustment. Our findings have non-trivial implications to the extent that gender inequality in wages can exacerbate income inequality for economies engaged in offshore outsourcing.
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