The Impact of Trade Liberalization on Gender Wage Differentials in India's Manufacturing Sector

39 Pages Posted: 24 Dec 2006

See all articles by Nidhiya Menon

Nidhiya Menon

Brandeis University - International Business School

Yana Rodgers

Rutgers University - Department of Women's and Gender Studies

Date Written: December 2006

Abstract

As trade liberalization in India has unleashed a new wave of competitive forces in the economy since 1991, firms have faced growing pressure to cut costs in order to continue production. This study addresses the question of whether the increasing competitive forces from India's trade liberalization affected the wages of male and female workers differently. Neoclassical theory implies that costly discrimination against female workers should diminish over time with increased competition (Becker 1971). We incorporate this idea into a theoretical model of competition and industry concentration in which the net impact of international trade on the gender wage gap could be positive or negative depending on the initial size of Becker's discrimination coefficient. Our study tests the theoretical model using repeated cross sections of India's NSSO household survey data merged with trade and production data from 1983 to 2004. We employ OLS and Fixed Effects techniques at the industry level to estimate the relationship between the male-female residual wage gap and measures of domestic concentration and international trade competition. Results indicate that increasing openness to trade is associated with a widening in the wage gap in India's concentrated manufacturing industries. This result is consistent with female workers in India having weak bargaining power and a lower workplace status. They are thus less able to negotiate for favorable working conditions and higher pay, a situation that places them in a vulnerable position as firms compete in the global market place.

Keywords: Trade liberalization, gender wage differential, India

JEL Classification: F14, J16, J31, O12

Suggested Citation

Menon, Nidhiya and Rodgers, Yana, The Impact of Trade Liberalization on Gender Wage Differentials in India's Manufacturing Sector (December 2006). Available at SSRN: https://ssrn.com/abstract=953400 or http://dx.doi.org/10.2139/ssrn.953400

Nidhiya Menon (Contact Author)

Brandeis University - International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States
781-736-2230 (Phone)
781-736-2269 (Fax)

Yana Rodgers

Rutgers University - Department of Women's and Gender Studies ( email )

162 Ryders Lane
New Brunswick, NJ 08901
United States
732-932-9331 (Phone)
732-932-1335 (Fax)

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