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International trade and wage discrimination : evidence from East Asia

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  • Berik, Gunseli
  • Van der Meulen Rodgers, Yana
  • Zveglich, Joseph E.

Abstract

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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3111.

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Date of creation: 31 Aug 2003
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Handle: RePEc:wbk:wbrwps:3111

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Keywords: Economic Theory&Research; Water and Industry; Environmental Economics&Policies; Public Health Promotion; Health Monitoring&Evaluation; Health Monitoring&Evaluation; Water and Industry; Environmental Economics&Policies; Economic Theory&Research; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT;

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References

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  1. Zadia M. Feliciano, 2001. "Workers and trade liberalization: The impact of trade reforms in Mexico on wages and employment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 95-115, October.
  2. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  3. Currie, Janet & Harrison, Ann E, 1997. "Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S44-71, July.
  4. Black, Sandra & Brainerd, Elizabeth, 2002. "Importing Equality? The Impact of Globalization on Gender Discrimination," CEPR Discussion Papers 3532, C.E.P.R. Discussion Papers.
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  6. 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.
  7. Stephanie Seguino, 1997. "Gender wage inequality and export-led growth in South Korea," Journal of Development Studies, Taylor & Francis Journals, vol. 34(2), pages 102-132.
  8. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  9. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
  10. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S20-43, July.
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  13. Joseph E. Stiglitz & Shahid Yusuf, 2001. "Rethinking the East Asian Miracle," World Bank Publications, The World Bank, number 13969, October.
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Cited by:
  1. 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, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  2. Fatma El-Hamidi, 2007. "Have Economic Reforms Paid Off? Gender Occupational Inequality in the New Millennium in Egypt," Working Papers 338, University of Pittsburgh, Department of Economics, revised Feb 2008.
  3. Maria S. Floro & Mieke Meurs, 2010. "Gender Equality at the Heart of Decent Work," Working Papers 2010-01, American University, Department of Economics.
  4. Stanley R. Keil & Lee C. Spector, 2005. "The Impact of Wal-Mart on Employment Andwage Differentials in Alabama," Working Papers 200508, Ball State University, Department of Economics, revised Dec 2005.
  5. repec:ilo:ilowps:446898 is not listed on IDEAS

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