International Trade and Wage Discrimination : Evidence from East Asia
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 compet...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/08/2487582/international-trade-wage-discrimination-evidence-east-asia http://hdl.handle.net/10986/18124 |
| Summary: | 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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