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GLOBALIZATION, WAGES, AND THE QUALITY OF JOBS: FIVE COUNTRY STUDIES
Inquiry—which reports wages by gender in 161 occupations for 80 countries—for 1983 through 1999. In the base data set, the average occupational gender gap, as measured by wages, is 13 percent in developed countries and 4 percent in developing countries. After sorting countries by income, occupational gender discrimination is regressed on GDP per capita, trade openness, and FDI. Of interest is the result that gender discrimination is positively correlated with GDP per capita in low-income countries, but not in high-income countries. Thus, there appears to be some nonlinearity in the relationship between gender discrimination and income. Trade and the gender wage gap are negatively correlated for both low- and high-income countries. However, for FDI, nonlinearity is again observed: the gender gap falls with FDI in low-income countries but rises in highincome countries. Some difference between high- and low-income countries is expected. Trade would normally be expected to raise the return to low-skilled workers in developing countries and raise the return to skilled workers in developed countries. Women may also have a different skill set than men, producing a differential impact for international trade. To the extent that women are differentially low skilled, trade would be expected to raise wages of women in developing countries. Women in developed countries would only gain if the pro-competitive effect of trade increased pressure on firms with a taste for discrimination. Oostendorp (2004) then sorts occupations into high wage and low wage. Presumably, high-wage occupations are also high-skilled occupations. He finds the following: • Trade and FDI reduce the gender wage gap for highly skilled workers in highincome countries and low-skilled workers in low-income countries. This is consistent with the hypothesis that as trade expands production in those goods in which a country has a comparative advantage, there is an increase in the relative demand for female workers and a rise in their relative wage. • Trade and FDI reduce the gender wage gap for low-skilled workers in high-income countries. This is consistent with a pro-competitive effect on gender-discriminating employers in shrinking industries in high-income countries. • FDI increases the gender wage gap for high-skilled occupations in poor countries. Thus, the pro-competitive effect of trade does not appear to be an important determinant of gender wage discrimination in developing countries. It is also possible that the technology embodied in FDI raises the demand for skill, limiting the pro-competitive effects of globalization.
TRADE AND CHILD LABOR The interaction between globalization and child labor is complex. According to economic theory, trade may increase child labor if globalization provides new work opportunities for children and their families. Trade also has relative price and wage effects that may alter each family’s child labor choices. Households endowed with the country’s scarce factor will suffer a decline in wealth and may, as a consequence, increase child labor, while households endowed with the abundant factor will do the opposite. Overall, to the extent that trade increases national income and relaxes liquidity constraints, the national level of child labor in a globalizing economy should decline. Finally, child labor may decline with globalization because children typically lack the skills required to produce goods for export.