The Impact of Trade Openness on Gender Pay Gap

Abstract

Objective: The objective of this study is to assess the impact of trade openness (among other variables) on gender pay gap in twenty selected Arab and non-Arab countries. A panel data covering the period 2010-2019 is utilized.. Method: A two panel regression models are employed. One model examines the impact of trade percentage of GDP, foreign direct investment (FDI) percentage of GDP, women's labor participation, and women's participation in parliament on the gender pay gap. The same model is applied first to all countries in the sample, and second to the sample dividing countries according to size as large and small countries.. Results: The findings indicate that, in the overall sample, trade percentage of GDP positively and significantly influences the gender pay gap percentage, while FDI percentage of GDP has a negative and significant impact. Additionally, women's participation in parliament is found to have a negative and significant effect on the gender pay gap, whereas women's labor participation shows no significant correlation. In the context of large countries, trade percentage of GDP has a positive and significant impact on the gender pay gap, and women's labor participation is negatively associated with the gap. However, FDI percentage of GDP and women's parliamentary participation are not statistically significant in these countries. For small countries, only women's participation in parliament exhibits a negative and significant relationship with the gender pay gap. Conclusion: The study's results highlight the complex dynamics between trade openness and gender wage inequality, emphasizing the varying effects based on country size. Policymakers should consider these findings to develop targeted strategies addressing gender pay disparities within the context of trade openness