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Globalization (Trade) and the Wellbeing of (Poor) Women and Children. Maurizio Bussolo Gender Inequality and Globalization: Recent Evidence and Debates November 30, 2011 12:30 - 2:00pm - MC2-800 Sponsored by PREM Gender Anchor (World Bank). Key Question and Controversies. - PowerPoint PPT Presentation
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Globalization (Trade) and the Wellbeing of (Poor) Women
and Children
Maurizio Bussolo
Gender Inequality and Globalization: Recent Evidence and Debates November 30, 2011
12:30 - 2:00pm - MC2-800
Sponsored by PREM Gender Anchor (World Bank)
Key Question and ControversiesWhat is the impact of trade shocks on the well-being of
(poor) women and children?
R. Kanbur (2001): “Trade, openness and poverty/inequality are the archetypal, emblematic areas around which there are deep divisions, and where certainly the rhetoric is fiercest”
Three broad areas of disagreement:
Level of aggregationTime horizonMarket structure and power
Theory and Empirical AnalysisTo answer our key question, one needs to understand how
macroeconomic shocks are linked to microeconomic consequences
1st stage: macro shock and its effects on factor markets• What is the impact of trade liberalization on factor incomes of men
and women
2nd stage: poverty depends on how factor incomes are turned into individual consumption by the sharing of factor incomes between members of the household
• Tax and public expenditures• Sharing within the household (patterns of household formation and
intrahousehold allocations)
Feedback loops stage: macro-level changes alter the micro-level intrahousehold allocation processes which, in turn…
1st Stage - Trade and gender gap: earnings
Standard models (Ricardo, HOS) say…
Discrimination and competition (through increased imports) [Becker (1971)]. But increased competition reduces the bargaining power of wage workers.
Empirical findings are mixed.
1st Stage - Trade and gender gap: employment opportunities
Women’s lab. participation has risen in most countries in recent decades
But isolating the effect of trade expansion from other effects can be difficult.
A robust finding: the type of exportable sector that expands matters a lot
feminization of employment through export-orientation: manufacturing>agriculture; services (?)
Possible explanation: women tend to have weaker property rights over land and complementary factors needed for agriculture production.
Additional finding: women tend to be confined to female jobs.
2nd and Feedback Stages: Trade and intrahousehold dynamics
Trade liberalization (via its effects on gender gaps) is likely to influence the allocation of time and resources among household members;
Changes of women bargaining power and long term growth and poverty effects:
An increase of women’s income has normally a beneficial effect on household calorie consumption and on education expenditures.
Fewer studies consider these effects due to limited availability of relevant micro data
Growth
Trade
Poverty
Gender inequalityDistribution
Main MessagesWhat is the impact of trade liberalization on the well-
being of women and children?
Some messages from research are very clear:
Trade expansion may exacerbate gender disparities in agricultural-based, African economies but may reduce it in manufacturing-based economies (like Honduras)
For a constant rate of growth, a deterioration in household income distribution triggered by widening gender disparities results in lower poverty reduction
Through their effect on human capital investment at the household level, gender disparities may also lower long term growth ( lower potential for long term poverty alleviation)
Main MessagesHowever:
Even if trade liberalization brings gender effects, these tend to be of a small and sometimes uncertain sign;
Thus when trade liberalization exacerbates gender disparities, the positive (aggregate) income effects dominate;
In policy relevant terms
trade liberalization should not be halted because of concerns over potential negative effects on women, overall income growth effects over-compensate;
This does not mean that trade-related gender inequality effects should be ignored (government interventions needed)
Two case studies
The role played by gender in shaping the links between trade and poverty can be illustrated by considering the stories of two women.
Consuelo in San Pedro Sula
Consuelo in San Pedro Sula 34 years old Married 2 children Almost finished primary school (5
years of schooling) Wage worker in the formal sector Earns 1,150 LP per month (1995
prices) HH per capita income of 655 LP This is not enough to reach the
poverty line of 675 LP per month
Aminata in Diourbel
Aminata in Diourbel 33 years old Married 4 children Slightly more than 2 years of schooling Agricultural self-employed (basically
millet) Earns 19,160 CFA francs per month
(1995 prices) HH per capita income of 8,340 CFA
francs Not enough to reach the poverty line
of 8,500 CFA francs
Consuelo and Aminata live in two different contexts (1995)
Aminata: Senegal
Honduras (1995) Senegal (1995)
Urbanization Rate 43% 61%
Poverty Rate 55% 67%
Comparative Advantage Maquila Groundnuts
In the mid 1990s, their respective governments opted for export-led growth
strategies
How is this MACRO decision affecting the lives of Consuelo and Aminata?
Consuelo faces new
opportunities
Finds a job in the manufacturing sector Her salary increases by 31% This is enough to pull the household out of poverty! The difference between Consuelo’s and her husband
wage reduces 16%, which means that she feels more empowered within her household
Aminata loses
bargaining power
Since Aminata’s husband is a groundnut producer, the household has a higher income
However, Aminata’s husband controls all the cash from trading groundnuts, creating two negative effects:
Deters Aminata from helping her husband in the production of groundnuts
Adverse change in consumption patterns
0
10
20
30
40
50
60
Primary Industry Const. andTrans.
Commerce Services
Share of GDP Share of Employment
A Summary of our micro resultsTrade-related Shock
Manufactures (LAC) Agriculture (SSA)
Differences in Comparative Advantage
Increase in Demand forFemale workers
Increase in exports of cash cropsUsually controlled by men
Gender wage gap ↓ HH Income↑
Poverty ↓
Gender income gap ↑
Lower supply response
Poverty ↓
Lower investmentIn Human Kap
Long term adverse effect
HH Income↑
Concluding remarks
An important caveat: the above results have not taken into account the feedback loop (from micro to macro – family formation, household structure);
In a sense they take the social norms and preference as static; but these change
There is a complex dynamic interplay between gender inequality and development;
This dynamic interplay is emphasized by WDR 2012 and LAC chief economist report (education, health, access; U shaped relations)
Concluding remarksRelationship between Female Labor Force Participation and GDP per capita
Household Size and Age of Household Head by Income Group
Concluding remarks
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