Importing Equality? The Effects of Increased Competition on the Gender Wage Gap

34 Pages Posted: 11 Aug 1999

See all articles by Sandra E. Black

Sandra E. Black

University of Texas at Austin - Center for Law, Business, and Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Norwegian School of Economics (NHH) - Department of Economics

Elizabeth Brainerd

Brandeis University - Department of Economics; IZA Institute of Labor Economics

Date Written: March 1999

Abstract

It is now well documented that the gender wage gap declined substantially in the 1980s, despite rising overall wage inequality. While Blau and Kahn (JoLE 1997) attribute much of this improvement to gains in women's relative labor market experience and other observable characteristics, a substantial part of the decline in the gender wage gap remains unexplained and may be due to reduced discrimination against women in the labor market. This paper tests the hypothesis (based on Becker 1957) that increased globalization in the 1980s forced employers to reduce costly discrimination against women and thus accounted for part of the "unexplained" improvement in the gender pay gap.

To test this hypothesis, we calculate the change in the residual gender wage gap across industries (as well as cities) over time using CPS data from 1977 - 1994, and test the correlation between this measure and changes in import shares. The wage data are further broken down by the type of market structure in an industry, i.e., whether the industry is concentrated or competitive. Since concentrated industries face little competitive pressure to reduce discrimination, an increase in competition from increased trade should lead to a reduction in the residual gender wage gap. We use a difference-in-differences approach to compare the change in the residual gender wage gap in concentrated versus unconcentrated sectors, using the latter as a control for changes in the gender wage gap that are unrelated to competitive pressures. The findings indicate that increased competition through trade did contribute to the narrowing of the gender wage gap, suggesting that, at least in this sense, trade may benefit women relative to men.

JEL Classification: J7, J13

Suggested Citation

Black, Sandra E. and Brainerd, Elizabeth, Importing Equality? The Effects of Increased Competition on the Gender Wage Gap (March 1999). FRB of New York Staff Report No. 74, Available at SSRN: https://ssrn.com/abstract=163149 or http://dx.doi.org/10.2139/ssrn.163149

Sandra E. Black (Contact Author)

University of Texas at Austin - Center for Law, Business, and Economics ( email )

Austin, TX
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Norwegian School of Economics (NHH) - Department of Economics

Helleveien 30
N-5035 Bergen
Norway

Elizabeth Brainerd

Brandeis University - Department of Economics ( email )

Waltham, MA 02454-9110
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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