Trade liberalisation and women's employment intensity: Analysis of India's manufacturing industries

Abstract

In the context of increasing contribution of developing countries in world trade, an important question is whether trade can be used as an instrument to stimulate higher participation of women in the labour market? Trade and industrial liberalization undertaken during the 1990s and 2000s marked the end of India's nearly four decade experiment with state directed, heavy industry based, and import substituting industrialization. In this context, we analyse the role of various trade and technology related factors in determining female employment intensity (FEI), in a panel of India's manufacturing industries for the period 1998-2008. We find that import tariff rates exert a negative effect on FEI, supporting the hypothesis that firms, when exposed to international competition, tend to reduce costs by substituting male with female workers. Further, the relative demand for female workers increases to the extent that trade liberalization leads to resource reallocation in favour of unskilled labour intensive industries where India holds comparative advantage. By contrast, greater use of new technology and capital intensive production biases the gender composition of workforce against females. Liberalization has not led to large growth of female employment in India's organized manufacturing sector because the resource reallocation effect has not been strong enough to offset the negative technology effect.