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Importing equality? The effects of increased competition on the gender wage gap

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Author Info
Sandra E. Black
Elizabeth Brainerd

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Abstract

It is now well documented that the gender wage gap declined substantially in the 1980s, despite rising overall wage inequality. While Blau and Kahn (JoLE 1997) attribute much of this improvement to gains in women's relative labor market experience and other observable characteristics, a substantial part of the decline in the gender wage gap remains unexplained, and may be due to reduced discrimination against women in the labor market. This paper tests the hypothesis (based on Becker 1957) that increased globalization in the 1980s forced employers to reduce costly discrimination against women and thus accounted for part of the "unexplained" improvement in the gender pay gap. ; To test this hypothesis, we calculate the change in the residual gender wage gap across industries (as well as cities) over time using CPS data from 1977 - 1994, and test the correlation between this measure and changes in import shares. The wage data are further broken down by the type of market structure in an industry, i.e. whether the industry is concentrated or competitive. Since concentrated industries face little competitive pressure to reduce discrimination, an increase in competition from increased trade should lead to a reduction in the residual gender wage gap. We use a difference-in-differences approach to compare the change in the residual gender wage gap in concentrated versus unconcentrated sectors, using the latter as a control for changes in the gender wage gap that are unrelated to competitive pressures. The findings indicate that increased competition through trade did contribute to the narrowing of the gender wage gap, suggesting that, at least in this sense, trade may benefit women relative to men.

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Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 74.

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Date of creation: 1999
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Handle: RePEc:fip:fednsr:74

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Related research
Keywords: Competition ; Wages ; Discrimination in employment;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August. [Downloadable!] (restricted)
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  2. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 345-68, July. [Downloadable!] (restricted)
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  6. Ashenfelter, Orley & Hannan, Timothy, 1986. "Sex Discrimination and Product Market Competition: The Case of the Banking Industry," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 149-73, February. [Downloadable!] (restricted)
  7. David A. Jaeger & Susanna Loeb & Sarah E. Turner & John Bound, 1998. "Coding Geographic Areas Across Census Years: Creating Consistent Definitions of Metropolitan Areas," NBER Working Papers 6772, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Borjas, George J & Ramey, Valerie A, 1995. "Foreign Competition, Market Power, and Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1075-1110, November. [Downloadable!] (restricted)
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  11. Douglas L. Kruse, 1988. "International trade and the labor market experience of displaced workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 41(3), pages 402-417, April.
  12. Judith K. Hellerstein & David Neumark & Kenneth R. Troske, 1997. "Market Forces and Sex Discrimination," NBER Working Papers 6321, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Wood, Robert G & Corcoran, Mary E & Courant, Paul N, 1993. "Pay Differences among the Highly Paid: The Male-Female Earnings Gap in Lawyers' Salaries," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 417-41, July. [Downloadable!] (restricted)
  14. Noel Gaston & Daniel Trefler, 1994. "Protection, trade, and wages: Evidence from U.S. manufacturing," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(4), pages 574-593, July.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Weichselbaumer, Doris & Winter-Ebmer, Rudolf, 2003. "The Effects of Competition and Equal Treatment Laws on the Gender Wage Differential," CEPR Discussion Papers 4015, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Anna Lovasz, 2008. "Competition and the Gender Wage Gap: New Evidence from Linked Employer-Employee Data in Hungary 1986-2003," Budapest Working Papers on the Labour Market 0804, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
  3. Seguino, Stephanie, 2006. "The great equalizer?: Globalization effects on gender equality in Latin America and the Caribbean," MPRA Paper 6509, University Library of Munich, Germany. [Downloadable!]
  4. Cunningham, Wendy V., 2001. "Sectoral allocation by gender of Latin American workers over the liberalization period of the 1990s," Policy Research Working Paper Series 2742, The World Bank. [Downloadable!]
  5. Sandra E. Black & Philip E. Strahan, 2001. "The Division of Spoils: Rent-Sharing and Discrimination in a Regulated Industry," American Economic Review, American Economic Association, vol. 91(4), pages 814-831, September. [Downloadable!] (restricted)
  6. Doris Weichselbaumer & Rudolf Winter-Ebmer & Martina Zweimüller, 2007. "Market Orientation and Gender Wage Gaps: An International Study," Economics working papers 2007-12, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
    Other versions:
  7. Seguino, Stephanie, 2003. "Taking gender differences in bargaining power seriously: Equity, labor standards, and living wages
    [Gender Equality through Labor Standards and Living Wages: An Exploration of the Issues for Asian     ," MPRA Paper 6508, University Library of Munich, Germany, revised Oct 2003. [Downloadable!]
  8. Seguino, Stephanie & Grown, Caren, 2006. "Gender equity and globalization: Macroeconomic policy for developing countries," MPRA Paper 6540, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  9. David Neumark & Wendy A. Stock, 2001. "The Effects of Race and Sex Discrimination Laws," NBER Working Papers 8215, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Miguel Székely & Nancy Birdsall & Jere R. Behrman, 2000. "Economics Reform and Wage Differentials in Latin America," RES Working Papers 4235, Inter-American Development Bank, Research Department. [Downloadable!]
  11. Miguel Székely & Nancy Birdsall & Jere R. Behrman, 2000. "Reforma económica y diferencias de salarios en América Latina," RES Working Papers 4236, Inter-American Development Bank, Research Department. [Downloadable!]
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