CGE Analysis of the Impact of Foreign Direct Investment and Tariff Reform on Female and Male Wages
This study analyzes the impact on male and female wages of tariff reform and the reduction of regulatory barriers faced by domestic and foreign firms operating in business services. The study applies the model to Tanzania and develops a data set th...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/10/20309724/cge-analysis-impact-foreign-direct-investment-tariff-reform-female-male-wages http://hdl.handle.net/10986/20501 |
| Summary: | This study analyzes the impact on male
and female wages of tariff reform and the reduction of
regulatory barriers faced by domestic and foreign firms
operating in business services. The study applies the model
to Tanzania and develops a data set that distinguishes labor
and wages by gender for 52 sectors and four skill
categories. The model is the first to incorporate modern
trade theory to assess the gender implications of trade
reform. Given that the Dixit-Stiglitz framework results in
productivity gains from additional varieties of services,
the analysis finds that real wages increase across all
worker categories. However, the increase in wages is higher
for males than for females, because business services use
males more intensively than females. The most skilled
(female and male) workers, who are also the most intensively
used in the business services sectors, benefit more from the
real increases in wages. The model illustrates that as the
development process continues and developing countries
become more business service oriented, these sectors demand
more educated workers and their wages will increase relative
to those of unskilled workers. The policy conclusion from
this model is that it is crucial to invest in the education
of females so their human capital increases and their skills
are more marketable in business services and other more
technologically modern occupations. Otherwise, the wage gap
between males and females would likely widen further. |
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