International Trade and the Gender Wage Gap: New Evidence from India’s Manufacturing Sector

SummaryThis study examines how increasing competitive forces from India’s trade liberalization have affected women’s relative wages and employment. Neoclassical theory implies that costly discrimination against female workers should diminish over time with increased competition. We incorporate this idea into a theoretical model of competition and industry concentration and test the model using repeated cross-sections of India’s National Sample Survey Organization (NSSO) household survey data merged with trade and production data from 1983 to 2004. Estimates from ordinary least-squares (OLS) and fixed effects regressions at the industry-level indicate that increasing openness to trade is associated with larger wage gaps in India’s concentrated manufacturing industries.