NAFTA and the Gender Wage Gap

Upjohn Institute Working Papers, 17-270

46 Pages Posted: 26 Apr 2017

See all articles by Shushanik Hakobyan

Shushanik Hakobyan

International Monetary Fund (IMF)

John McLaren

University of Virginia; NBER

Date Written: April 26, 2017

Abstract

Using U.S. Census data for 1990–2000, we estimate effects of NAFTA on U.S. wages, focusing on differences by gender. We find that NAFTA tariff reductions are associated with substantially reduced wage growth for married blue-collar women, much larger than the effect for other demographic groups. We investigate several possible explanations for this finding. It is not explained by differential sensitivity of female-dominated occupations to trade shocks, or by household bargaining that makes married female workers less able to change their industry of employment than other workers. We find some support for an explanation based on an equilibrium theory of selective non-participation in the labor market, whereby some of the higher-wage married female workers in their industry drop out of the labor market in response to their industry’s loss of tariff. However, this does not fully explain the findings, so we are left with a puzzle.

Keywords: NAFTA, gender wage gap, local labor markets

JEL Classification: F16, F13, J31

Suggested Citation

Hakobyan, Shushanik and McLaren, John, NAFTA and the Gender Wage Gap (April 26, 2017). Upjohn Institute Working Papers, 17-270. Available at SSRN: https://ssrn.com/abstract=2958842 or http://dx.doi.org/10.2139/ssrn.2958842

Shushanik Hakobyan (Contact Author)

International Monetary Fund (IMF) ( email )

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Washington, DC 20431
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John McLaren

University of Virginia ( email )

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Charlottesville, VA 22904-4182
United States
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434-982-2904 (Fax)

NBER

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