published in: Industrial and Labor Relations Review, 2004, 57 (4), 540-598
While researchers have long held that discrimination cannot endure in an increasingly
competitive environment, there has been little work testing this dynamic process. This paper
tests the hypothesis (based on Becker 1957) that increased competition resulting from
globalization in the 1980s forced employers to reduce costly discrimination against women.
The empirical strategy exploits differences in market structure across industries to identify the
impact of trade on the gender wage gap: because concentrated industries face little
competitive pressure to reduce discrimination, an increase in competition from increased
trade should lead to a reduction in the gender wage gap. We compare the change in the
residual 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. We find that increased competition through trade
did contribute to the relative improvement in female wages in concentrated relative to
competitive industries, suggesting that, at least in this sense, trade may benefit women by
reducing firms’ ability to discriminate.
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