Gender, Informal Employment and Trade Liberalization in Mexico

We study how trade liberalization affects labour reallocation in formal and informal jobs across gender. We link the Mexican labour force survey with data on tariffs at the 4-digit level from 1993 to 2001, and find that a tariff reduction increases the probability of holding a formal job for both men and women within industries. Constructing a regional tarif measure, we show that local effects of changes in trade policy differ between gender and industries. At the regional level, trade liberalization decreases the probability of working formally for women, but increases the probability of working formally for high- skilled men. Then, controlling for sectoral differences, we find that in the manufacturing sector, men benefit more from the formalization of jobs induced by trade liberalization. While in the service sector, workers, especially low- skilled women, have higher chances to work informally.