Effects of Trade on Female Labor Force Participation

Transcription

1 Effects of Trade on Female Labor Force Participation Philip Sauré 1 Hosny Zoabi 2 1 Swiss National Bank 2 Tel Aviv University Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 1/46

2 Introduction - the story of the current paper MCAS ւ ց International Trade Specialization Female LFP ց ւ FCAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 2/46

3 Outline of the talk Introduction - the story of the current paper The model: 1. An autarkic economy 2. A two-country world economy Empirical evidence A generalization of the model Conclusions Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 3/46

4 Assumptions Assumption (1) Are females and males labor perfect substitutes? Acemoglu Autor and Lyle (JPE 2004) 10% female labor input ր ց 7%-8% w F 3%-5% w M Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 4/46

5 Introduction - Our Story Assumption (2): Physical capital complements females labor Goldin (1990) The labor market s rewards for strength, which made up a large fraction of earnings in the nineteenth century, ought to be minimized by the adoption of machinery, and its rewards for brain power ought to be increased. (p. 59) Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 5/46

6 Introduction - Our Story Assumption (2): Physical capital complements females labor Goldin (1990) The labor market s rewards for strength, which made up a large fraction of earnings in the nineteenth century, ought to be minimized by the adoption of machinery, and its rewards for brain power ought to be increased. (p. 59) Assumption (3): Home production Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 5/46

7 Introduction - Our Story LDC s-capital Scarce Labor Intensive Good = Males CAS ւ ց Capital Stock Female LFP Home Prod. ց ւ DC s-capital Abundant Capital Intensive Good = Females CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 6/46

8 Introduction - Our Story Females relative advantages Home Children Market X1 Females CAS Market X2 Males CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 7/46

9 Introduction - Our Story Capital abundant economy - (Autarky) Produces both X1 and X2 Females relative advantages Home Children Market X1 Females CAS Market X2 Males CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 8/46

10 Introduction - Our Story Capital Abundant Economy - (International Trade) Specializes in producing X1: Females CAS Home Females relative advantages Children females Market X1 Females CAS males Market X2 Males CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 9/46

11 Introduction - Our Story Capital Scarce Economy - (Autarky) Produces both X1 and X2 Females relative advantages Home Children Market X1 Females CAS Market X2 Males CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 10/46

12 Introduction - Our Story Capital Scarce Economy - (International Trade) Specializes in producing X2: Males CAS Females relative advantages Home Children females Market X1 Females CAS males Market X2 Males CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 11/46

13 Introduction - Our Story International trade perspective Non tradable {}}{ X3 Labor Market { Tradables }} { X1 X2 Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 12/46

14 Introduction - Our Story International trade perspective Non tradable {}}{ Children Home { Tradables }} { X1 X2 Labor Market Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 13/46

15 The Model - Galor and Weil AER (1996) factors of production K - Physical capital L m - Mental labor L p - Physical labor L p - men have superior ability to women. L m - men and women have equal abilities. For simplification Each woman is endowed with one unit of L m. Each man is endowed with one unit of L m and one unit of L p. = w M t > w F t Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 14/46

16 The Model Economy L t households each contains one husband and one wife each individual has one unit of time individuals live for three periods: childhood, adulthood and old age. As children, consume parents time. As adults, raise children, work and save their wages. At old age, consume their savings. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 15/46

17 The Model Preferences - Couples decision problem u t = γ ln(n t )+(1 γ)ln(c t+1 ) Where: n t Number of children c t+1 Old age consumption Budget constraint Let z be the time cost for raising one child. wt F zn t + s t wt M + wt F if zn t 1 wt F + wt M (zn t 1)+s t wt M + wt F if zn t 1 Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 16/46

18 The Model - Household Optimization Preferences - Couples decision problem u t = γ ln(n t )+(1 γ)ln(c t+1 ) Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 17/46

19 The Model - Household Optimization Preferences - Couples decision problem u t = γ ln(n t )+(1 γ)ln(c t+1 ) γ(1+wt M /wt F ) if γ(1+wt M /wt F ) 1 zn t = 2γ if 2γ > 1 1 otherwise Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 17/46

20 The Model - Production The final good ( 1/ρ Y t = θx ρ 1,t 2,t) +(1 θ)xρ ρ,θ (0,1) Two intermediate goods X 1 = ak1,t α (Lm 1,t )1 α + bl p 1,t X 2 = bl p 2,t females CAS males CAS Assumption Males Cannot divide their labor endowments between the two sectors. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 18/46

21 The Model - Household Optimization zn t = γ(1+wt M /wt F ) if γ(1+wt M /wt F ) 1 2γ if 2γ > 1 1 otherwise w M w F = 1+ b (1 α)aκ α t κ t = K 1,t /L m 1,t Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 19/46

22 The Model - Capital Accumulation k t κ wm w F zn t (FLFP) k F (FLFP) threshold Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 20/46

23 The Model - A Two Country World κ wm w F zn t (FLFP) Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 21/46

24 The Model - A Two Country World κ wm w F zn t (FLFP) Developing Economy X2 = κ = FLFP Developed Economy X1 = κ = FLFP Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 21/46

25 The Model - Intuition Intermediate good, X1 X 1 = ak α 1,t(L m 1,t) 1 α + bl p 1,t females CAS Intermediate good, X2 X 2 = bl p 2,t males CAS Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 22/46

26 Empirical Evidence The Model s Predictions: 1. Labor reallocation 2. Women s employment 3. Women s relative wage Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 23/46

27 Labor Reallocation Trefler AER (1995); Debaere JPE (2003); Schott AER (2003); Schott QJE (2004); Bernard, Jensen and Schott JIE (2006) Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 24/46

28 Labor Reallocation Trefler AER (1995); Debaere JPE (2003); Schott AER (2003); Schott QJE (2004); Bernard, Jensen and Schott JIE (2006) Debaere (2003): In comparisons of factor contents of countries with very different capital-labor ratios, there is clear support for an HOV sign prediction Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 24/46

29 Labor Reallocation Trefler AER (1995); Debaere JPE (2003); Schott AER (2003); Schott QJE (2004); Bernard, Jensen and Schott JIE (2006) Debaere (2003): In comparisons of factor contents of countries with very different capital-labor ratios, there is clear support for an HOV sign prediction Schott (2003): Results reveal that industry-level data hide substantial intra-industry heterogeneity. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 24/46

30 Labor Reallocation Trefler AER (1995); Debaere JPE (2003); Schott AER (2003); Schott QJE (2004); Bernard, Jensen and Schott JIE (2006) Debaere (2003): In comparisons of factor contents of countries with very different capital-labor ratios, there is clear support for an HOV sign prediction Schott (2003): Results reveal that industry-level data hide substantial intra-industry heterogeneity. Schott (2004):... capital- and skill-abundant countries use their endowment advantage to produce vertically superior varieties... As exposure to labor-intensive imports from low-wage countries increases, high-wage countries shift their output toward activities within industries that reflect their comparative advantage. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 24/46

31 Labor Reallocation Trefler AER (1995); Debaere JPE (2003); Schott AER (2003); Schott QJE (2004); Bernard, Jensen and Schott JIE (2006) Debaere (2003): In comparisons of factor contents of countries with very different capital-labor ratios, there is clear support for an HOV sign prediction Schott (2003): Results reveal that industry-level data hide substantial intra-industry heterogeneity. Schott (2004):... capital- and skill-abundant countries use their endowment advantage to produce vertically superior varieties... As exposure to labor-intensive imports from low-wage countries increases, high-wage countries shift their output toward activities within industries that reflect their comparative advantage. Bernard et al. (2006): Find a reallocation of U. S. manufacturing away from labor-intensive plants and toward capital-intensive plants within industries as industry exposure to imports from low-wage countries rises. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 24/46

32 Empirical Evidence The Model s Predictions: 1. Women s employment 2. Women s relative wage Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 25/46

33 Empirical Evidence The Model s Predictions: 1. Women s employment 2. Women s relative wage Employment vs. Wages Revenga QJE (1992); Gaston and Trefler (1994); Grossman (1988); Ebenstein, Harrison, McMillan and Phillips (2011) found significant employment responses to import competition in some sectors, though smaller effects on wages. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 25/46

34 Empirical Evidence (U.S. Mexico) Jan/1/1994, (NAFTA) Average US Tariff Most Favoured Nation / Mexico 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% mfn_ave mexico_ave Krueger (1999) Quantitative restrictions Exchange rate policy Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 26/46

35 Empirical Evidence (U.S. Mexico) Trade share Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 27/46

36 Empirical Evidence (U.S. Mexico) Data World Institute for Strategic Economic Research (WISER) Export data by state and destination ( ). IPUMS-CPS (March) Age, sex, marital status, population status (to distinguish between civilian or Armed Forces), nativity (to identify immigrants), location (state), Hispanic origin (to identify Mexicans), educational attainment, employment status (to compute the formal employment share) weeks worked and usual hours worked (to compute total hours worked). Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 28/46

37 Empirical Evidence (U.S. Mexico) Econometric model y s = α+β ts s +γx s + u s y st = Female labor force participation: Relative hour worked Relative employment Hours worked Female relative wage Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 29/46

38 Characteristics of U.S. data, 1990/91 and 2006/07 FEMALE Weekly hours worked Employment (%) Hourly wage MALE Weekly hours worked Employment (%) Hourly wage 1990/ / (1.92) 65 (5.2) (1.65) (1.89) 78 (3.6) (2.02) (1.84) 67 (4.7) (2.22) 32.2 (1.81) 77 (4.2) (3.24) Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 30/46

39 Empirical Evidence (U.S. Mexico) y s = α+β ts s +γx s + u s Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 31/46

40 Empirical Evidence (U.S. Mexico) y s = α+β ts s +γx s + u s ts s = µ+θd s +θ 2 X s +ν s Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 31/46

41 Empirical Evidence (U.S. Mexico) y s = α+β ts s +γx s + u s ts s = µ+θ 1 d s +ξ s ts s = µ+θd s +θ 2 X s +ν s Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 31/46

42 (DV): Change in Females Share in Average Hours Worked (1) (2) (3) (4) (5) (6) Method (OLS) (IV) (IV) (IV) (IV) (IV) Trade (0.201) (0.409) (0.420) (0.689) (0.424) (0.445) FL 80/ (0.060) FL 90/ (0.157) (0.179) (0.129) (0.152) GSP (0.016) Unem (0.213) F Ed (0.051) Mex (12.342) First-Stage Coefficients (DV: Trade) Distance (0.544) (0.581) (0.584) (0.597) (0.629) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.066) (0.069) (0.063) (0.068) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 32/46

43 (DV): Change in Females Share in Average Hours Worked (1) (2) (3) (4) (5) (6) Method (OLS) (IV) (IV) (IV) (IV) (IV) Trade (0.201) (0.409) (0.420) (0.689) (0.424) (0.445) FL 80/ (0.060) FL 90/ (0.157) (0.179) (0.129) (0.152) GSP (0.016) Unem (0.213) F Ed (0.051) Mex (12.342) First-Stage Coefficients (DV: Trade) Distance (0.544) (0.581) (0.584) (0.597) (0.629) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.066) (0.069) (0.063) (0.068) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 33/46

44 (DV): Change in Females Share in Average Hours Worked (1) (2) (3) (4) (5) (6) Method (OLS) (IV) (IV) (IV) (IV) (IV) Trade (0.201) (0.409) (0.420) (0.689) (0.424) (0.445) FL 80/ (0.060) FL 90/ (0.157) (0.179) (0.129) (0.152) GSP (0.016) Unem (0.213) F Ed (0.051) Mex (12.342) First-Stage Coefficients (DV: Trade) Distance (0.544) (0.581) (0.584) (0.597) (0.629) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.066) (0.069) (0.063) (0.068) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 34/46

45 (DV): Change in Hours Worked vs Employment DV: Change in Females Share in Average Hours Worked Employment Excluding Trade in Married TX Hi&AK TX, HI&AK Manufacture Couples (1) (2) (3) (4) (5) (6) Trade (0.500) (0.331) (0.519) (0.502) (0.427) (2.131) FL 90/ (0.170) (0.162) (0.175) (0.150) (0.250) (0.264) First-Stage Coefficients (DV: Trade) Distance (0.540) (0.802) (0.815) (0.546) (0.568) (0.608) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.067) (0.060) (0.060) (0.066) (0.075) (0.107) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 35/46

46 (DV): Change in Hours Worked vs Employment DV: Change in Females Share in Average Hours Worked Employment Excluding Trade in Married TX Hi&AK TX, HI&AK Manufacture Couples (1) (2) (3) (4) (5) (6) Trade (0.500) (0.331) (0.519) (0.502) (0.427) (2.131) FL 90/ (0.170) (0.162) (0.175) (0.150) (0.250) (0.264) First-Stage Coefficients (DV: Trade) Distance (0.540) (0.802) (0.815) (0.546) (0.568) (0.608) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.067) (0.060) (0.060) (0.066) (0.075) (0.107) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 36/46

47 (DV): Change in Hours Worked vs Employment DV: Change in Females Share in Average Hours Worked Employment Excluding Trade in Married TX Hi&AK TX, HI&AK Manufacture Couples (1) (2) (3) (4) (5) (6) Trade (0.500) (0.331) (0.519) (0.502) (0.427) (2.131) FL 90/ (0.170) (0.162) (0.175) (0.150) (0.250) (0.264) First-Stage Coefficients (DV: Trade) Distance (0.540) (0.802) (0.815) (0.546) (0.568) (0.608) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.067) (0.060) (0.060) (0.066) (0.075) (0.107) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 37/46

48 (DV): Change in Hours Worked vs Employment DV: Change in Females Share in Average Hours Worked Employment Excluding Trade in Married TX Hi&AK TX, HI&AK Manufacture Couples (1) (2) (3) (4) (5) (6) Trade (0.500) (0.331) (0.519) (0.502) (0.427) (2.131) FL 90/ (0.170) (0.162) (0.175) (0.150) (0.250) (0.264) First-Stage Coefficients (DV: Trade) Distance (0.540) (0.802) (0.815) (0.546) (0.568) (0.608) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.067) (0.060) (0.060) (0.066) (0.075) (0.107) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 38/46

49 (DV): Females Labor Force Participation Dependent Variabl Hours worked Employment State Weight + + (1) (2) (3) (4) Trade (0.27) (0.17) (0.01) (0.01) FL 90/ (0.08) (0.07) (0.08) (0.08) First-Stage Coefficients (DV: Trade) Distance (0.56) (0.08) (0.57) (0.67) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.11) (0.12) (0.09) (0.10) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 39/46

50 (DV): Males Labor Force Participation Dependent Variabl Hours worked Employment State Weight + + (1) (2) (3) (4) Trade (0.38) (0.17) (0.01) (0.00) FL 90/ (0.13) (0.09) (0.11) (0.09) First-Stage Coefficients (DV: Trade) Distance (0.56) (0.71) (0.56) (0.71) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.07) (0.08) (0.08) (0.07) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 40/46

51 (DV): Females Labor Force Participation (Skilled) Dependent Variabl Hours worked Employment State Weight + + (1) (2) (3) (4) Trade (0.25) (0.15) (0.01) (0.00) FL 90/ (0.01) (0.08) (0.08) (0.11) First-Stage Coefficients (DV: Trade) Distance (0.55) (0.74) (0.55) (0.67) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.12) (0.13) (0.13) (0.12) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 41/46

52 (DV): Males Labor Force Participation (Skilled) Dependent Variabl Hours worked Employment State Weight + + (1) (2) (3) (4) Trade (0.38) (0.15) (0.01) (0.00) FL 90/ (0.09) (0.1) (0.21) (0.19) First-Stage Coefficients (DV: Trade) Distance (0.55) (0.74) (0.55) (0.67) First-Stage Coefficients (DV: FLFP in 1990/91) FL 80/ (0.12) (0.13) (0.13) (0.12) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 42/46

53 (DV): Females Relative Hourly Wage: (w f /w m ) DV Average Wage Female wage over male based on: Wage from the following percentiles 90 th 85 th 80 th 70 th (1) (2) (3) (4) (5) Trade (0.036) (0.024) (0.021) (0.019) (0.018) (w f /w m ) 90/ (0.563) (0.338) (0.207) (0.209) (0.165) First-Stage Coefficients (DV: Trade) Distance (0.803) (0.825) (0.836) (0.825) (0.807) First-Stage Coefficients (DV: (w f /w m ) 90/91 (w f /w m ) 80/ (0.132) (0.104) (0.119) (0.112) (8.87) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 43/46

54 (DV): Females Relative Hourly Wage: (w f /w m ) DV Average Wage Female wage over male based on: Wage from the following percentiles 90 th 85 th 80 th 70 th (1) (2) (3) (4) (5) Trade (0.036) (0.024) (0.021) (0.019) (0.018) (w f /w m ) 90/ (0.563) (0.338) (0.207) (0.209) (0.165) First-Stage Coefficients (DV: Trade) Distance (0.803) (0.825) (0.836) (0.825) (0.807) First-Stage Coefficients (DV: (w f /w m ) 90/91 (w f /w m ) 80/ (0.132) (0.104) (0.119) (0.112) (8.87) Obs Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 44/46

55 A General Framework Production Q i = F i (K,F,M) i = 1,2. & ( d d K ln wf w M ) > 0 Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 45/46

56 A General Framework Production Q i = F i (K,F,M) i = 1,2. & ( d d K ln wf w M ) > 0 F 1 / F > M 1 / M K 1 / K > F 1 / F. Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 45/46

57 Galor and Mountford (2008) LDC s - Tech. State of Inferior Technology Unskill Intensive Good ց Low Returns to Education ց ւ Fertility Education Technological Progress DC s - Tech. Advanced Skill Intensive Good ւ High Returns to Education Philip Sauré and Hosny Zoabi Effects of Trade on Female Labor 46/46