Importing Equality? The Impact of Globalization on Gender Discrimination

Abstract

A key dynamic implication of the Becker model of discrimination (1957) is that increased product market competition will drive out costly discrimination in the long run. This paper tests that hypothesis by examining the impact of globalization on gender discrimination in manufacturing industries. Because concentrated industries face little competitive pressure, an increase in competition from trade should reduce the residual gender wage gap more in these industries than in competitive industries. The authors compare the change in the gender wage gap between 1976 and 1993 in concentrated versus competitive manufacturing industries, using the latter as a control for changes in the gender wage gap that are unrelated to competitive pressures. They find that while trade increases wage inequality by modestly reducing the relative wages of less-skilled workers, at the same time it appears to benefit women by reducing the ability of firms to discriminate. n his seminal work on the economics of discrimination, Gary Becker's theory (1957) has the startling implication that increased competition in the product market will reduce discrimination against women and minorities in the long run. This implies a positive relationship between market power and employment discrimination: because a firm must forego profits in order to indulge in a "taste for discrimination," employers with considerable market power will be better able to practice discrimination than those with little market power. The theory also has the dynamic implication that changes in market power will produce changes in the relative employment and earnings of groups initially subject to discrimination. Of specific interest to us, in that regard, is the prediction that increased product market competition in an industry (or region) over time will reduce earnings and employment disparities between men and women, all else equal.

Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail?

“…Previous empirical research about the relationship between discrimination and market competition has pursued two main approaches. The focus of studies at the industry level is whether in sectors sheltered by regulation, employers hire relatively more male workers (Ashenfelter and Hannan, 1986), or favor male over female workers in terms of wages and promotion (Black and Strahan, 2001;Black and Brainerd, 2004). More recently, studies at the firm level have tested for cross-sectional correlation between female employment and profitability among firms with varying degree of product market power (Hellerstein, Neumark, and Troske, 2002;Kawaguchi, 2007;Heyman, Svaleryd, and Vlachos, 2011).…”

How does entry regulation influence entry into self‐employment and occupational mobility?1

“…For an incorporation of these classical studies in the more recent literature of matching functions, see Van Ours and Ridder (1995). 29 See, for example, Black and Strahan (2001) and Black and Brainerd (2004). reallocation, employment, innovation and economic growth and can lead to inefficiencies.…”

Crime and Discrimination in the Labor Market: An Empirical Approach

“…The empirical results show thatcompetition viainternational trade in concentrated industries is directly correlatedwith wage discrimination against women. Black and Brainerd (2004) discuss the effect of globalization on gender discriminationin manufacturing industries.The authorsshow that,although trade expandwage inequality based onsmall reductionthe relative wages of less-skilled workers, simultaneously it seems to benefit women since reduce the possibilityof firms to discriminate. Kawaguchi (2007) evaluates if the male-female wage differential is due to employer discrimination based on the Japanese firm-level panel data from the 1990s.…”