Gender Wage Discrimination and Trade Openness. Prejudiced Employers in an Open Industry

55 Pages Posted: 11 Nov 2017

See all articles by Ben Yahmed Sarra

Ben Yahmed Sarra

ZEW – Leibniz Centre for European Economic Research

Date Written: 2017

Abstract

I introduce taste-based discrimination in a trade model with imperfect competition and provide an explanation for the heterogeneous effects of international trade on the gender wage gap within sectors. Firms operate in an oligopoly where prejudiced employers can use their rents to pay men a premium in line with Becker’s theory. On one hand, import competition reduces local rents and with them the average gender wage gap in sectors that were sheltered from competition prior to trade liberalization. On the other hand, easier access to foreign markets can increase domestic firms’ profits and enable discriminatory firms to maintain wage gaps. Evidence from the Uruguayan trade liberalisation supports the empirical relevance of the taste-based discrimination mechanism at the sectoral level.

Keywords: Gender Wage Gap, Employer Taste-Based Discrimination, International Trade, Imperfect Competition

JEL Classification: F16, J31, J7, L13

Suggested Citation

Sarra, Ben Yahmed, Gender Wage Discrimination and Trade Openness. Prejudiced Employers in an Open Industry (2017). ZEW - Centre for European Economic Research Discussion Paper No. 17-047, Available at SSRN: https://ssrn.com/abstract=3067928 or http://dx.doi.org/10.2139/ssrn.3067928

Ben Yahmed Sarra (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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