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

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  • Sandra E. Black
  • Elizabeth Brainerd

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.

Suggested Citation

  • Sandra E. Black & Elizabeth Brainerd, 1999. "Importing equality? The effects of increased competition on the gender wage gap," Staff Reports 74, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:74
    Note: For a published version of this report, see Sandra E. Black and Elizabeth Brainerd, "Importing Equality? The Impact of Globalization on Gender Discrimination," Industrial and Labor Relations Review 57, no. 4 (July 2004): 540-59.
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    References listed on IDEAS

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    Cited by:

    1. Martina Zweimüller & Rudolf Winter‐Ebmer & Doris Weichselbaumer, 2008. "Market Orientation and Gender Wage Gaps: an International Study," Kyklos, Wiley Blackwell, vol. 61(4), pages 615-635, November.
    2. Stephanie Seguino & Caren Grown, 2006. "Gender equity and globalization: macroeconomic policy for developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(8), pages 1081-1104.
    3. Datta Gupta, Nabanita, 2002. "Gender, pay and development: a cross-country analysis," MPRA Paper 15311, University Library of Munich, Germany.
    4. Seguino, Stephanie, 2003. "Taking gender differences in bargaining power seriously: Equity, labor standards, and living wages," MPRA Paper 6508, University Library of Munich, Germany, revised Oct 2003.
    5. Clémence Berson, 2011. "Competition and Discrimination: a not so Obvious Relationship," Documents de travail du Centre d'Economie de la Sorbonne 11005, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    6. Doris Weichselbaumer & Rudolf Winter-Ebmer, 2007. "The effects of competition and equal treatment laws on gender wage differentials [‘Models of job discrimination’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 22(50), pages 236-287.
    7. Doris Weichselbaumer & Rudolf Winter‐Ebmer, 2005. "A Meta‐Analysis of the International Gender Wage Gap," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 479-511, July.
    8. Miguel Székely & Nancy Birdsall & Jere R. Behrman, 2000. "Economics Reform and Wage Differentials in Latin America," Research Department Publications 4235, Inter-American Development Bank, Research Department.
    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.
    10. 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.
    11. Miguel Székely & Nancy Birdsall & Jere R. Behrman, 2000. "Reforma económica y diferencias de salarios en América Latina," Research Department Publications 4236, Inter-American Development Bank, Research Department.
    12. Stephanie Seguino & Caren A. Grown, 2006. "Feminist-Kaleckian Macroeconomic Policy for Developing Countries," Economics Working Paper Archive wp_446, Levy Economics Institute.
    13. 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.
    14. 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.
    15. René Böheim & Helmut Hofer & Christine Zulehner, 2007. "Wage differences between Austrian men and women: semper idem?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(3), pages 213-229, July.
    16. 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.
    17. Byeongchan An & Robert M. Bushman & Anya V. Kleymenova & Rimmy E. Tomy, 2022. "Social Externalities of Bank Enforcement Actions: The Case of Minority Lending," Finance and Economics Discussion Series 2022-036, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

    wages; discrimination in employment; competition;
    All these keywords.

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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    This paper has been announced in the following NEP Reports:

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