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Gendered Impacts of FDI Liberalization in Developing Countries

Paper Session

Friday, Jan. 6, 2023 2:30 PM - 4:30 PM (CST)

New Orleans Marriott, Preservation Hall Studio 8
Hosted By: International Association for Feminist Economics
  • Chair: Jessica Leight, International Food Policy Research Institute

Trade Liberalization and Gender Inequality in India: A Task-Content of Occupations Approach

Shruti Sharma
,
CUNY

Abstract

This paper considers the differential impact of input and output tariff liberalization on gender outcomes in India’s labour markets. It is the first to distinguish between occupational categories based on their task-content to analyse these effects. Recent evidence suggests that trade induced competition and technological upgradation can reduce gender employment and wage gaps in labour markets. This paper identifies the occupational categories most affected by these competition and technology adoption effects of trade liberalization. It finds that competition effects of trade liberalization increases employment of female workers in routine occupations— both manual and cognitive — and reduces gender employment gaps in routine manual occupations. On the other hand, input tariff liberalization has strong displacement effects and worsens gender employment gaps in routine manual occupations. However, it increases employment of female workers in routine cognitive occupations and there is some evidence that it reduces gender-wage gaps in non-routine cognitive occupations. This suggests that trade induced technological change is skill-biased, and that it has potential to improve labour market outcomes for female workers through its complementarities with skill and education.

FDI Liberalization, Structural Change, and Marriage Market Outcomes

Bilge Erten
,
Northeastern University
Jessica Leight
,
International Food Policy Research Institute
Lianming Zhu
,
Osaka University

Abstract

This paper provides novel evidence about the effects of the liberalization of foreign direct investment regulation in China on gendered patterns of structural transformation between 1990 and 2015. We construct a Bartik-style liberalization measure using baseline patterns of labor allocation across sectors and newly coded data on four waves of liberalization over time. Using micro-level data from the China population census, we demonstrate that liberalization of FDI regulation is associated with substitution from agricultural to non-agricultural employment for both men and women. While the labor market effects are of roughly equal magnitude, we also observe a substantial decrease in the probability of marriage and childbearing only for women, concentrated among women who are entering their prime child-bearing years at the moment of peak liberalization.

The Effects of International Scrutiny on Manufacturing Workers: Evidence from the Rana Plaza Collapse in Bangladesh

Laurent Bossavie
,
World Bank
Yoonyoung Cho
,
World Bank
Rachel Heath
,
University of Washington

Abstract

After the tragic factory collapse of Rana Plaza in 2013, both the direct reforms and indirect responses of retailers have plausibly affected workers in the Ready Made Garment (RMG) sector in Bangladesh. These responses included a minimum wage increase, high profile but voluntary audits, and an increased reluctance to subcontract to smaller factories. This paper estimates the net impact of these responses using six rounds of the Labor Force Survey and a triple difference approach that compares garment workers to non-garment workers, in districts containing the vast majority of export garment factories versus other districts, pre versus post Rana Plaza. As intended by the reforms, we find that increased international scrutiny improved working conditions by 0.80 standard deviations. In contrast with what the theory of compensating differentials would suggest, we do not find that workers' wages were negatively impacted: instead, the post-Rana Plaza responses increased wages by about 10%.

Protection for Whom? Trade, Labor Enforcement and Gender Disparities in the Labor Market

Jennifer Poole
,
American University
Lourenco S. Paz
,
Baylor University

Abstract

By Brazilian labor law, employers are mandated to provide maternity leave to female employees. In addition, social norms in the country are such that women are expected to care for sick and young household members. For these reasons, among others, employing female workers formally is more expensive than employing male workers formally. In this setting, we consider the implications of a real exchange rate shock, increasing openness to foreign markets, on the formalization of men and women. We hypothesize that the exchange rate shock, given labor institutions in Brazil, will disproportionately benefit men as formal employment opportunities expand. By contrast, we expect a differential expansion in self-employment (contract work) among Brazilian women, as firms circumvent key female-specific labor policies. In this sense, our work highlights a potential consequence of quality labor practice to protect women on the women themselves.

Discussant(s)
Hale Utar
,
Grinnell College
Jennifer Poole
,
American University
Jessica Leight
,
International Food Policy Research Institute
Shruti Sharma
,
CUNY
JEL Classifications
  • F2 - International Factor Movements and International Business
  • O1 - Economic Development