PublicDisclosureAuthorized PublicDisclosureAuthorized PolicyResearchWorkingPaper10518 Gender-SegmentedLaborMarketsandTradeShocks CarlosGóesGladysLopez-AcevedoRaymondRobertson PovertyandEquityGlobalPracticeJuly2023 PolicyResearchWorkingPaper10518 Abstract Gendersegmentationinlabormarketsshapesthelocaleffectsofinternationaltrade.Thispaperdevelopsatheorythatembedstradeingender-segmentedlabormarketsandshowsthatinthisframework,foreigndemandshocksmayincreaseordecreasethefemale-to-maleemploymentratio.Ifaforeigndemandshockfromarelevantmarkethappensinafemale-intensive(male-intensive)sector,themodelpredictsthatthefemale-to-maleemploymentratioshouldincrease(decrease).Thepaperthenusesplausiblyexogenous variationintheexposureofTunisianlocallabormarketstoforeigndemandshocksandshowsthattheempiricalresultsareconsistentwiththetheoreticalprediction.InTunisia,acountrywithahighdegreeofgendersegmentationinthelabormarkets,foreigndemandshockshavebeenrelativelylargerinmale-intensivesectors.Thisinducedadecreaseinthefemale-to-maleemploymentratio,withhouseholdslikelysubstitutingfemaleformalelaborsupply. ThispaperisaproductofthePovertyandEquityGlobalPractice.ItispartofalargereffortbytheWorldBanktoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebathttp://www.worldbank.org/prwp.Theauthorsmaybecontactedatgacevedo@worldbank.org. ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent. ProducedbytheResearchSupportTeam Gender-SegmentedLaborMarketsandTradeShocks CarlosG´oes∗1,GladysLopez-Acevedo2,andRaymondRobertson31UCSanDiego 2WorldBank 3TexasA&MUniversity Keywords:Internationaltrade,LaborMarkets,Gender,Inequality,Poverty,Jobs. JELcodes:F16,J16,O19 ∗WethankMarcMuendler,ClaudiaBergandmultipleparticipantsofUCSDandWorldBankseminarsfortheir helpfulcomments.ThispaperservedasbackgroundresearchtoproducetheWorldBank’sreport“ExportstoImproveLaborMarketsintheMiddleEastandNorthAfrica.”FinancialsupportfromtheWorldBankisgratefullyacknowledged.TheviewsexpressedhereinarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheWorldBank. 1Introduction Genderinequalityinlabormarketsisawidelydiscussedphenomenon,bothamongresearchersandthegeneralpublic.Evenincountriesthatrankhighingenderequalityindicators,femaleworkerstendtoearnlessthanmaleswiththesameobservablecharacteristics.1.Thissuggeststhatbiases,socialnormsand/orindividualpreferencescreatefrictionsinthelabormarketthatpreventworkersfromoptimallymovingacrosssectors.Iflargeenough,suchfrictionscanleadtosubstantiallevelsofmarketsegmentation–asituationinwhichmaleandfemaleworkersperformdifferentsetsofpre-determinedtasks,ratherthansortingintotasksinwhichtheyaremoreproductive.2. Internationaltradecanimpactdifferentgroupsofworkersindifferentialways.Tradeshocks inducedbychangesinpolicyorinforeigndemandalterdomesticrelativeprices,bothinproductandfactormarkets,andwilllikelyimpactemploymentandwages.Ifthedomesticmarkethasahighdegreeofgendersegmentation,itwouldnotbesurprisingthattradeshocksdifferentiallyimpactmalesandfemales. ThroughthelensofBecker’s(1971)canonicalmodelof“taste-baseddiscrimination,”biascreatesinefficienciesinproductionsincemanagersmightbewillingtopaymaleworkersmorerelativetoafemaleworkerofthesameproductivityThisequilibriumcanonlybesustainedwithsomedegreeofprotectionfromentryofnewcompetitors.Iftradeliberalizationincreasescompetitioninproductmarkets,itshouldleadtoadecreaseingenderinequalityinthelabormarket. Theempiricalevidencedoessuggestthat,inmanyinstances,tradeliberalizationdecreasesgenderinequality.ButthemechanismsaremorecomplexthanwhatBeckerhadinmind.First,inmanydevelopingcountries,tradeliberalizationinducedsectoralshiftstowardsindustriesandtasksthataremorefemale-intensiveinagender-segmentedlabormarket.Second,increasedforeigncompetitioncantemporarilydisplacemaleworkers,reducehouseholdincomes,andinducefemalestosupplylaboroutsidethehousehold–anaddedworkereffect. Thesefactorshighlightthatboththenatureofthetradeshocksanddomesticlabormarketinstitutionsmatterindeterminingtheimpactoftradeliberalizationongenderinequality.Thispapershedslightontherelationshipbetweenexportsandgender-segmentedlabormarketsbystudyingtheeffectsofincreasedforeigndemandshocksonlocallabormarkets. Inthispaper,wemaketwomaincontributionstotheliterature:onetheoreticalandanotherempirical.First,wepresentageneralequilibriummodelthatcombinesinternationaltradeandgender-segmentedlabormarkets.Productionisdividedbetweenafemale-intense