Günseli Berik

Yana van der Meulen Rodgers

This study explores the impact of competition from international trade on wage discrimination by sex in two highly open economies. If discrimination is costly, as posited in neoclassical theory based on Becker (1959), then increased industry competitiveness from international trade reduces the incentive for employers to discriminate against women. Alternatively, increased international trade may contribute to employment segregation and reduced bargaining power for women to achieve wage gains. The approach centers on comparing the impact of international trade on wage discrimination in concentrated and nonconcentrated sectors. The effect of international trade competition is expected to be more pronounced in concentrated sectors, where employers can use excess profits in the absence of trade to cover the costs of discrimination. Wage discrimination is proxied by the portion of the wage gap that cannot be explained by observable skill differences between men and women. The empirical model is estimated using a rich panel data set of residual wage gaps, trade ratios, and alternative measures of domestic concentration for Taiwan (China) and the Republic of Korea during the 1980s and 1990s. Results indicate that in contrast to the implications of neoclassical theory, competition from foreign trade in concentrated industries is positively associated with wage discrimination. These results imply that concerted efforts to enforce equal pay legislation and apply effective equal opportunity legislation are crucial for ensuring that women's pay gains will match those of men in a competitive environment. This paper--a product of the Gender Division, Poverty Reduction and Economic Management Network--is part of a larger effort in the network to understand the impact of trade on labor markets.

Evidence from East Asia

International Trade and Wage Discrimination

Ann Zammit

The contributors to this edited volume explore the effects of various development strategies and associated macroeconomic policies on women’s well-being and progress towards gender equality. Detailed analyses of major UN reports on gender reveal the different approaches to assessing absolute and relative progress for women and the need to take into account the specifics of policy regimes when making such assessments. The book argues that neoliberal policies, especially the liberalization of trade and investment, make it difficult to close gender wage and earnings gaps, and new gender sensitive policies need to be devised. These and other issues are all examined in more detail in several gendered development histories of countries from Latin America and Asia.

Yana van der Meulen Rodgers

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