Globalisation: A woman's best friend? Not for all

Alessandra Bonfiglioli, Federica De Pace 25 June 2021

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The rise in income inequality and, more prominently, in the wage gap between men and women has been one of the major concerns among policymakers and the public in recent years. While globalisation has been regarded as a possible driver of the increase in inequality (see Helpman 2018 for a survey), its effects on the gender wage gap have not received much attention.

Since Stolper and Samuelson (1941), trade has been known to have redistributive effects depending on comparative advantage, whereby the factors that are intensively employed in the exporting sector benefit and the others lose. Most works following this line of research focused on comparative advantage based on education (college vs high school) and occupations (white vs blue collars). Consistently, recent empirical contributions (see Autor et al. 2013) have documented for the US a drop in employment and wages of less educated workers employed in local areas and sectors that were more exposed to Chinese import competition. However, the literature in labour economics has shown comparative advantage to also arise from differences across genders, whereby female workers have an advantage in interactive and analytical tasks, which are usually associated with white-collar occupations (Spitz-Oener 2006, Black and Spitz-Oener 2007, Ngai and Petrongolo 2017), and a disadvantage in the manual tasks that are typical of blue-collar occupations. 

This suggests that trade, by interacting with gender-based comparative advantage, may affect the wage gap between men and women, and to a different extent across tasks and occupations. In particular, if exporting requires stronger skills in interpersonal relations with customers, female white-collar workers may be expected to gain relative to their male counterparts. Conversely, if exporting implies more engaging in production, female blue-collar workers may be expected to lose. The evidence exploring such mechanism is scant and the results tend to vary with the level of aggregation of the data in use (Aguayo-Téllez et al. 2010, Juhn et al. 2014, Saure and Zoabi 2014).    

Firm’s export and the gender wage gap among blue-collar versus white-collar workers

In a recent work (Bonfiglioli and De Pace 2021) we study whether export activity affects the gender wage gap at the firm-worker level, and if this varies across occupations and tasks consistently with gender-based comparative advantage. We do so by using very detailed administrative and survey data providing information on 3.6 million German workers matched with nearly 15,000 establishments from both manufacturing and service sectors, followed from 1993 to 2007. The average gap in wage earnings between women and men in our sample, after controlling for workers’, firms’ and sectoral characteristics, is about 20%, while the average firm exports 31% of its sales.

Following a similar approach to Bøler et al. (2015, 2018), we estimate the effect of the annual variation in a plant’s exports on the differential in wage earnings between any pair of male and female employees with the same experience and skills, controlling for a number of other workers’ and firm’s characteristics, and for a series of state-, industry- and time-specific factors. This approach allows us to purge the effects that exports may have on the employment composition and selection of workers at the firm and sector level. Differently from Bøler et al. (2015 and 2018), who focus on Norwegian data, we find no significant effects of exports on the gender wage gap in general. 

Interestingly, we obtain significant and robust results when distinguishing between workers in white-collar and blue-collar occupations. In particular, our estimates show an increase in a firm’s export activity to raise the wage earnings of its female white-collar employees by more than those of their male co-workers with similar characteristics. Conversely, blue-collar women lose relative to men as an effect of a rise in their employer’s exports. Figure 1 provides a graphical representation of these effects in quantitative terms. Consider the annual wage gap between the average male and female employees in our estimation sample, amounting to €8,616 for white-collar occupations and to €4,124 for blue-collar occupations. If the export share of their firm increases from zero to the median of the distribution (equivalent to 20% of total sales), all else equal, the gender wage gap falls by €26 among white-collar workers, and it rises by €29 among blue collars. If the export share switches instead to the top quartile (50% of total sales), the gender wage gap is reduced by €65 and increased by €73 for white-collar and blue-collar employees, respectively. Finally, if the firm’s export share gets to the top percentile (95% of total sales), the predicted relative gains for white-collar women reach €123, while the relative losses of blue-collar female employees amount to €139.  

Figure 1 Firm’s export share the change in the annual gender wage gap

     

Moreover, we show that, while wage differentials between men and women react significantly to changes in export, they are only weakly associated with domestic sales. This suggests that selling to foreign markets, as opposed to serving domestic customers, may entail a change in the relative value that firms attach to female workers in certain occupations. 

Explaining heterogeneous effects: Gender-based comparative advantage

Overall, this first piece of evidence seems consistent with female comparative (dis)advantage in (blue-) white-collar occupations driving the effect of export on the gender wage gap. To probe deeper into this mechanism, we extend our analysis along three dimensions. First, we assess if, consistently with export requiring more services of white-collar workers and women having a comparative advantage in those, firms hire more female white collars as their exports increase. Indeed, we find this to be the case. Ideally, we would also like to estimate the effects of export on hours worked by each continuing employee, to establish whether the reaction of the annual wage gap is driven by a relative change in hours or in hourly wages. Unfortunately, we do not have information on hours worked. However, to gauge the effect of export on the relative value attached by the firm to their continuing female workers, we next investigate if a rise in export activity induces the firm to award them relatively more promotions. Consistently, we provide evidence that an increase in export moderately raises the relative probability that women in white-collar occupations are promoted (i.e. they experience an annual salary increase of at least 15%). 

Finally, we assess whether the reduction (increase) in the gender wage gap is driven by the intensity in tasks that have previously been identified as comparative advantage (disadvantage) of women by the labour literature, i.e. interactive tasks for white collars and manual tasks for blue collars. To do so, we compute for each of the 342 occupations specified in our dataset the intensity with which five categories of tasks (manual routine, manual non-routine, cognitive routine, analytic non-routine, and interactive non-routine) are performed on the job. Next, we classify each occupation by the task that it performs with the highest intensity –– for instance, bakers are classified as manual routine, while teachers as interactive non-routine. Then, we estimate the effects of export on different subsamples of occupations for both white-collar and blue-collar workers. Our results suggest that among white collars, the reduction in the gender wage gap caused by exports is driven by interactive non-routine occupations. Conversely, among blue-collar workers, the positive effect on the wage differential between men and women is driven by manual occupations.     

Conclusions

Overall, our work unveils a new stylised fact, pointing to the heterogeneous effects of trade on the gender wage gap depending on workers’ occupations and on the tasks they perform. Moreover, it shows this heterogeneity to be consistent with export strengthening gender-based comparative advantage. Besides underscoring a thus far overlooked determinant of gender disparities in labour earnings, this evidence is also relevant for policymakers. We show that international trade can in fact be seen as an opportunity to reduce the GWG among non-production workers, but also as a threat, especially for women in occupations in which they have a comparative disadvantage. Designing policies that support women taking part in trade, especially in positions in which they would benefit from their comparative advantage, is crucial to maximise the potential benefits from globalisation. 

Author’s note: The opinions expressed, and arguments employed herein, are those of the author and do not necessarily reflect the official views of the OECD or of its member countries.

References

Aguayo-Téllez, E, J Airola, and C Juhn (2010), “Did trade liberalisation benefit women? The case of Mexico in the 1990s”, VoxEU.org, 24 August.

Autor, D, D Dorn, and G Hanson (2013), "The China syndrome: Local labor market effects of import competition in the United States," American Economic Review 103(6): 2121-2168.

Black, S and A Spitz-Oener (2007), “Explaining women’s success: technological change and the skill content of women’s work”, VoxEU.org, 1 September.

Bonfiglioli, A and F De Pace (2021), “Export, female comparative advantage and the gender wage gap”, CEPR Discussion Paper 15801.

Bøler, E, B Javorcik, and K Ulltveit-Moe (2018), “Working across time zones: Exporters and the gender wage gap”, Journal of International Economics 111(C): 122-133.

Bøler, E, B Javorcik, and K Ulltveit-Moe (2015), "Globalisation: A woman's best friend? Not quite so", VoxEU.org, 18 May.

Helpman, E (2018), Globalization and Inequality, Cambridge: Harvard University Press.

Juhn, C, G Ujhelyi and C Villegas-Sanchez (2014), “Men, women, and machines: How trade impacts gender inequality”, Journal of Development Economics 106(C): 179-193.

Ngai, L and B Petrongolo (2017), “Gender gaps and the rise of the service economy”, American Economic Journal: Macroeconomics 9(4): 1-44.

Saure, P and H Zoabi (2014), “International trade, the gender wage gap and female labor force participation”, Journal of Development Economics 111(3): 17-33.

Spitz-Oener, A (2006), “Technical change, job tasks, and rising educational demands: Looking outside the wage structure”, Journal of Labor Economics 24(2): 235-270.

Stolper, W, P Samuelson (1941). "Protection and real wages", The Review of Economic Studies 9(1): 58–73, 1 November.

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Topics:  Gender Labour markets Poverty and income inequality

Tags:  gender, gender wage gap, globalisation, Inequality, exports, Germany

Associate Professor, Queen Mary University of London and CEPR Research Fellow

Junior Economist. OECD

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