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International trade and wage discrimination : evidence from East Asia

Author

Listed:
  • 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.

Suggested Citation

  • Berik, Gunseli & Van der Meulen Rodgers, Yana & Zveglich, Joseph E., 2003. "International trade and wage discrimination : evidence from East Asia," Policy Research Working Paper Series 3111, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3111
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Shepherd, Ben & Stone, Susan, 2017. "Trade and Women," ADBI Working Papers 648, Asian Development Bank Institute.
    3. repec:pit:wpaper:338 is not listed on IDEAS
    4. repec:ilo:ilowps:446898 is not listed on IDEAS
    5. Maria S. Floro & Mieke Meurs, 2010. "Gender Equality at the Heart of Decent Work," Working Papers 2010-01, American University, Department of Economics.
    6. 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.

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