The effects of a trade shock on gender-specific labor market outcomes in Brazil

Abstract

As countries around the world increasingly engage in international trade, labor markets respond, creating both winners and losers. In this paper, I analyze the impact of a trade shock on gender-specific local labor market outcomes in Brazil. I use an instrumental variable approach and population census data for Brazil to estimate the effect of both increased imports from China and increased exports to China on male and female local labor market outcomes from 2000 to 2010. Regions more exposed to imports from China experience slower wage growth in the traded and formal sectors, but the declines are significantly larger for men, particularly in sectors with low shares of female employment. Exports have a positive association with wage growth, but no relationship with employment growth. Import-induced wage declines are coupled with significant employment growth in the formal sector. The gains for women are nearly double those for men, increasing the share of female employment in the formal sector. Regions more exposed to Chinese imports also experience an increase in the female employment to population ratio and a decrease in male and female unemployment rates. Thus, trade with China induces new workers into the labor market, reduces unemployment, and reallocates labor to the formal sector. These employment gains are strongest for women, signaling reduced employment barriers for females. Further, as employment reallocates to the formal sector, occupation segregation declines, highlighting an additional avenue through which trade can have gendered labor market effects.