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Female Labor Supply and International Trade

Gu, Ke and Stoyanov, Andrey (2022): Female Labor Supply and International Trade.

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Abstract

We study the effect of spatial variation in female labor supply on international trade flows. We identify the set of gender-specific skills and argue that low female labor supply reduces the endowment of female-oriented skills and undermines comparative advantage in industries which use female labor intensively. We confirm this hypothesis using two different settings. First, we show that countries with low female labor supply, measured by female labor force participation, have comparative disadvantage in female-labor-intensive industries. To establish causality, we instrument female labor supply with cross-country differences in cultural values regarding the role of women in society. Second, we confirm the main hypothesis on trade data from Chinese regions. Using spatial variation in sex ratios resulting from the One Child Policy (OCP), we rely on the stringency of OCP as an exogenous female labor supply shifter. Other things equal, regions with higher female population share specialize in industries which use female labor intensively. We interpret our results as highlighting the importance of labor force gender composition for industry's productivity. Our results imply that the effect of gender imbalances in labor supply on labor market outcomes, observed in many parts of the world, can be mitigated through international trade by utilizing relatively abundant type of labor in export-oriented industries.

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