The Feminist Economics of Trade: recent research on a two-way relationship

Workshop ‘How to integrate a gender perspective into NCCR trade regulation’, Interdisciplinary centre for gender Studies,

World Trade Institute, University of Bern, 27 October 2010

Irene van Staveren(Professor of Pluralist Development Economics, Institute of

Social Studies, Erasmus University Rotterdam)

Globalization & Feminization

• Reduction of wage controls and fixed contracts• Increase in casual labour, part-time labour, sub-

contracting of production, homework • Reduction in minimum wages, labour standards, workers

protection

• Globalization has lead to feminization of employment, particularly in export sectors (1970’s-1990’s)

Income insecurity for households

=> increase in female labour supply

Flexibilization and Feminization of Labour in Trade

• North-South trade has increased the female employment share in manufacturing in the South

• North-South trade has decreased the female employment share in manufacturing in the North

Explanation: trade affects in particular female intensive sectors (textiles, leather, apparel)

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Gains and Losses of Trade for Women

• No impact on women’s life expectancy• No impact on women’s income relative to

men’s• Small positive impact on women’s

education• North: increasing share of women in

services sector• South: increasing share of women in

agriculture & manufacturing

Source: Margit Bussmann, ‘The effect of trade openness on women’s welfare and work life’, World Development 37 (6), pp. 1027-1038.

Gender Wage Discrimination and Trade

• Trade economist Bhagwati: globalisation increases competition, which in turn reduces labour market discrimination But statistics: wage gaps persist

• Feminist macroeconomist Seguino: GDP growth in export-oriented developing countries depends on gender wage inequality

Diagram from: Stephanie Seguino, ‘Gender Inequality and Economic Growth: a Cross-Country Analysis’ World Development, 28 (7), 2000: 1211-1230); and Feminist Economics, 2000.

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Gender inequality in wages with high trade

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Female earnings as a percentage of male earnings in manufacturing, selected developing countries, 1975–94 

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Explanation of diagram:

The gender wage gap stimulates labour intensive manufacturing exports in two ways:

– lowering the product price through low female wage costs

– increasing profits and hence the budget for purchasing new technology abroad

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Paradox:

Why does the big gender wage gap not lead to social conflict (protests by female workers) and, as a consequence, negative effects on GDP growth?

Answer:Because of gender differences in the socialization of women and their social position:Women tend to accept unequal treatment more easily than men (often secondary earners), or have to accept it because of less bargaining power (less trade union power)

Employment conditions worsen for men and women, with men’s conditions adjusting downward to women’s and women’s position not moving upwards.

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Overall assessment of globalisation-driven flexibilization & feminization:

Book: The Feminist Economics of Trade

Edited by Irene van Staveren, Diane Elson, Caren Grown, Nilufer CagatayRoutledge, 2007.

Part 1: Trade and Gender: Framing the Issues

Part 2: Impacts of Gender Inequality on Trade

Part 3: Impacts of Trade on Gender Inequality

Part 4: Feminist Approaches to Trade Policy

A Gendered Prebisch-Singer Hypothesis (Shaianne Osterreich) :

• Terms of Trade (import prices/export prices) decrease for developing countries

• P-S Hypothesis: decreasing terms of trade for South are due to less bargaining power of workers in the South to claim wage increases with rising productivity

• Empirical study 1975-1995 cross country data:– Decline of labour market discrimination of women in South

relative to labour market discrimination of women in North– Associated with improvement of terms of trade for South

Terms of trade will be helped by reducing discrimination (raising women’s wages and hence the product price) 15

Gendered Job Vulnerability (Sule Ozler) :

• Plant level data 1986-1996 Turkey on job creation and job destruction under trade

• Job creation was higher in export sector in particular for unskilled females

• Job destruction was higher for females (see next slide)

• Gross job reallocation rate was higher for females

Job vulnerability was higher for women than for men with Turkey’s export-led growth strategy

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Gender differences in job creation and destruction

(1) (2) (3) (4) (7) (8)

Unskilled female

Unskilled male

Skilledfemale

Skilledmale

Ratio(1)/(2)

Ratio(3)/(4)

A. Job creation

Import-competing 59.24 67.04 40.83 59.14 0.88 0.69

Export 67.52 65.88 42.84 56.58 1.02 0.76

Non-competing 60.99 66.60 34.97 53.50 0.92 0.65

B. Job destruction

Import-competing 85.42 79.68 90.76 82.66 1.07 1.10

Export 83.15 80.15 92.01 82.65 1.04 1.11

Non-competing 83.74 81.69 94.38 83.21 1.03 1.13

Does import competition reduce gender inequality in the US? (Ebru Kongar) :

• US data 1976-1993 at industry level, comparing concentrated and competitive manufacturing industries (biggest 4 firms <40% market share).

• Finding: reduction of gender wage gap with declining manufacturing employment

• Explanation: not expected trade theory mechanism of competition driving down discrimination but structuralist effects along gender lines:

– Competitive industries: increase of female share of production employment (cheaper labour) and decline in female wages -> more-cheap-labour strategy

– Concentrated industries: strong reduction of production employment, so that the remaining female workforce (office jobs) bring up average female wages, reducing the gender wage gap -> more-skill-intensive-production strategy

Free trade doe not necessarily remove price discrimination, but can re-enforce segmented quantity adjustments: protection helps gender equality 18

Does import competition reduce gender inequality in India?

• In concentrated industries the residual gender wage gap increases with increasing openness to trade

• Explanation: competition reduces rents in those industries and male workers have obtained a higher share of these rents, though stronger bargaining power (unions, male breadwinner norms) than female workers.

Source: Nidhiya Menon & Yana van der Meulen Rogders, ‘International trade and the gender wage gap: new evidence from India’s manufacturing sector’, World Development 37 95), pp. 965-981.

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Example: Mercosur-EU trade agreement since 1995 (1)

Numerator variables:• Trade elasticity of gender inequality in export employment:

d[Lfex /Lex]

• Trade elasticity of women’s purchasing power for food:

d[[Yf/female population]/Pfood]

Denominator variables:• d[EXij + IMij]/GDPi

Trade expansion in 10 years time for Mercosur vis-a-vis EU:– Trade + 42%– Export + 77 %– Import + 13%

Example: Mercosur-EU trade agreement since 1995 (2)

• Trade elasticities of gender inequality:– Food affordability -1 => women have a harder time to budget for

food for the household– Female employment share in exports -0.1 => inelastic: women

have not gained employment in the stable export sector– Male employment share in import competing sector -2.3 =>

women’s share of jobs has increased in the vulnerable sector

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Conclusions:- Women do not benefit much from trade with the EU- Gender inequality keeps Mercosur locked-in into a traditional low value added and low employment trade pattern with EU- Other trading partners generate higher productivity employment higher up the production ladder (Mercosur, North America, Latin America)

Comparing the trade impact of gender gaps between economies: model effects

• Low income agricultural economies– Lower gender gaps in education help to increase trade

(human capital effect)– Lower gender gaps in wages help to increase trade

(crowding in effect of female labour)

• Semi-industrialized economies– Lower gender gaps in education help to increase trade

(human capital effect)– Lower gender gaps in wages do not help to increase

trade (lower female wages are a competitive advantage)

Source: Stephanie Seguino, ‘gender, distribution, and Balance of Payments constrained growth in developing countries’, Review of Political Economy 22 (3), pp. 373-404.

Gender and Trade: policy entry points at 4 levels:

• International governance– OECD guidelines for MNCs: make gender more explicit– WTO: connect to women’s networks such as IGTN (International Gender and Trade

Network) and research– Bilateral trade agreements: EU has a rule on ensuring gender equality in all policy

areas, which includes trade: refer to policy consistency• Multinational firms

– In OECD countries: OECD guidelines– CSR policy should include informal sector suppliers– HRM policies: affirmative action, equal wage for equal work

• Governments in developing countries– Not excluding Export Processing Zones from labour law (minimum wages, no

discrimination) and gender policy• Households

– Home work: risk of child labour involvement due to low piece rates and strong time pressure for production

– Start of an (international) care chain which may affect care for children– Women’s income leading to empowerment?

• YES if backed up by gender equality laws, gender equal social norms, and a strong civil society

• NO if not (unequal family law, widespread practices of wife beating, polygamy, non-pooling of income between husband and wife)

Policy options: social clauses, codes of conduct, decent work (Stephanie Barrientos):

• Social clauses: limitation is that they put the onus for workers’ rights on exporting country governments whereas many value chains are dominated by Northern-based multinationals

• Codes of conduct, however, emphasize companies’ reputation and ignore women’s employment conditions in subcontracted informal sector

• ILO’s Decent work approach is all-encompassing but its instruments are limited to dialogue and persuasion, whereas WTO has legal force

24Combination is needed of trade protection & workers protection