Trade Liberalisation and the Gender Wage Gap: Evidence From Pilot Free Trade Zones Policy Reform in China

Abstract

Using national longitudinal survey data from the China Family Panel Studies spanning 2010 to 2018, this study conducts a quasi-natural experiment based on the pilot free trade zones (PFTZ) policy reform in China. The study examines the causal relationship between trade liberalisation and the gender wage gap (GWG) using a staggered difference-in-differences approach. Four conclusions emerge. First, the PFTZ policy increases wages for both men and women. However, the effect is larger for men than for women, suggesting that PFTZ policy expand the GWG. Second, the PFTZ policy's effect on wages is larger for the medium- than low- or high-wage groups. Third, the gender difference in the FTZ wage premium expands the overall GWG, whereas the gender disparity in the labour force allocation between FTZs and non-FTZs reduces the GWG. Finally, the gender difference in the FTZ wage premium expands the GWG in the low-, middle- and high-wage groups, and this effect is much more pronounced in the high-wage group. The gender disparity in the labour force allocation reduces the GWG in the medium-wage group, whereas it widens the GWG in the low- and high-wage groups.