Can trade policy change gender equality? Evidence from Chile

Abstract

Do firms reorganize gender composition of their employment in response to trade shocks? Using novel data on gender composition of employment across several occupational groups for Chilean manufacturing firms matched with customs data for 1995–2007, a developing country with low gender equality, and utilizing the 1998 Chile–Mexico Free Trade Agreement (FTA) as the quasi-natural shock, we document the first evidence that the share of female white-collar workers increased by 10% for new exporters exporting to Mexico due to the FTA. This happened through a substitution effect from male to female high-skilled workers due to higher use of technology (both domestic and foreign), high-skilled non-production tasks, and reduction in discrimination. We also show that this increase in this share of white-collar female workers is due to a demand- rather than supply-side effect. Overall, we emphasize that trade policy can play an important role in addressing the gender gap in employment.