Effects of Trade on Female Labor Force Participation

Male and female labor are imperfect substitutes and some sectors are more suitable for female employment than others. Clearly, expansions of those sectors that use female labor intensively must affect aggregate female labor force participation (FLFP). We suggest that FLFP actually drops when trade and international specialization expand sectors that use female labor intensively. This effect arises because expansions of the former sectors come along with contractions of others. The latter contractions, in turn, induce male workers to move to the expanding sectors, driving female workers out of formal employment. Thus, a country that is exporting female labor content is actually substituting male labor for female. Finally, building on U.S.-Mexican trade data, we provide empirical evidence that support our argument.