Men, Women, and Machines: How Trade Impacts Gender Inequality
This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality - gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers.
We would like to thank Yona Rubinstein, Nathan Nunn and Peter Morrow for their thoughtful discussions of an earlier version of the paper. We also want to thank Eric Verhoogen and seminar participants at LSE, Dalhousie, and the LACEA-Conference of the Trade and Integration Growth Network, 18th Annual Empirical Investigations in International Trade. We would ike to thank INEGI officials for granting on-site access to the firm level data used in this study under the commitment of complying with the confidentiality requirements set by the Mexican Laws and in particular, to Gerardo Leyva, Adriana Ramirez Nava and Gabriel Romero Velasco. Carolina Villegas-Sanchez acknowledges financial support from Banco Sabadell. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Juhn, Chinhui & Ujhelyi, Gergely & Villegas-Sanchez, Carolina, 2014. "Men, women, and machines: How trade impacts gender inequality," Journal of Development Economics, Elsevier, vol. 106(C), pages 179-193. citation courtesy of