Trade Openness and Gender Discrimination

Jorge Arbache,Marina C P Santos

doi:10.2139/ssrn.812564

Jorge Arbache, Marina C P Santos

Open Access

https://doi.org/10.2139/ssrn.812564

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Abstract

This paper investigates the impact of trade liberalization on gender wage discrimination. The authors employ a simple method that is able to capture the direct impacts of openness at the industry level on the gender wages. The authors find evidence that increasing openness is associated with narrowing wage gap, which results mainly from men’s wages declining. This is consistent with the Becker’s (1957) proposition that competition reduces discrimination in the labor market. The plan of the paper is as follows : 1) Section one introduces; 2) Section two presents the trade liberalization in Brazil; 3) Section three presents the data, strategy and results; and 4) Section four concludes.

Highlights

One issue that still attracts much attention of the academia is discrimination in the labor market
Discrimination in the labor market has been associated to noncompetitive product markets, and the most common argument assumes that there is a positive differential between wages of men and women higher than productivity differences caused by employer tastes (Becker, 1957)
In order to examine the gender wage gap before and after the trade liberalization controlling for productive endowments, we employ the Blinder-Oaxaca wage decomposition for the pre- and post-liberalization periods

Summary

Introduction

One issue that still attracts much attention of the academia is discrimination in the labor market. This paper tests the hypothesis that competitive market forces reduce or eliminate discrimination using the case study of a developing country that experienced rapid trade liberalization after a long period of economic closeness. This strategy entails significant advantages over the previous studies of this matter. The weighted average effective tariff, which remained largely unchanged in the 1980s, dropped from 68% in 1987 to 18% in 1992, while the standard deviation declined from 54% to 17% (Kume et al, 2003) While these tariff reductions were not severe by international standards, the removal of the nontariff barriers shifted the pattern of protection, especially for the manufacturing sector, and signaled that the long period of protectionism was at an end. Trade boomed between 1990 and 1996 with imports rising by 257% and exports by 151%

Empirical evidence

Findings

Conclusion