Macroeconomic Effects of Reducing Gender Wage Inequality in an Export‐Oriented, Semi‐Industrialized Economy

Abstract

The paper presents two short-run, structuralist models of an export-oriented, two-sector, semi-industrialized economy in which women workers are concentrated in export production. The first model analyzes the comparative static effects of an exogenous increase in female wages holding male wages and the exchange rate constant. The second model endogenizes the female-male wage ratio and the real exchange rate, assuming flexible nominal wages and a crawling-peg exchange rate. Either stable or unstable dynamics are possible. In the stable cases, a depreciation policy can either close or widen the gender wage gap.

The Impact of Gender Inequality in Education and Employment on Economic Growth: New Evidence for a Panel of Countries

“…Such gender pay gaps reduce female employment, increase fertility, and lower economic growth through these participation and demographic effects. In contrast, Blecker and Seguino (2002) highlight a different mechanism, leading to contrasting results. They suggest that high gender pay gaps and associated low female wages increase the competitiveness of export-oriented industrializing economies and thus boost the growth performance of these countries.…”

“…Thirdly, the results by Blecker and Seguino (2002) imply that gender gaps in employment access would also reduce economic growth as it would deprive countries to use (relatively cheap) female labour as a competitive advantage in an export-oriented growth strategy.…”

“…The relatively small theoretical literature on the subject yields conflicting results (e.g. Robert Blecker and Stephanie Seguino 2002;Berta Esteve-Volart 2004;Tiago de Cavalcanti and Jose Tavares 2007). While there is some empirical literature suggesting that high earnings gaps, combined with high female labour force participation rates, helped spur export-oriented economic growth in some Asian countries (e.g.…”

Gender equity and globalization: macroeconomic policy for developing countries

“…One study considers these questions for Asian economies where rapid growth was fueled by low-cost female labor in a period of otherwise global economic stagnation (Seguino 2002). A variety of well-being indicators suggest there has been some closure of gender gaps in well-being, but those countries that have improved the most were the slowest growing in the region and the least successful as 'open' economies.…”

“…Blecker and Seguino (2002), for example, model output and growth in an export-oriented semi-industrialized economy. In this two-sector model, female labor is used to produce export goods and male workers are concentrated in the nontradables sector (the model does not consider the care economy).…”