Friday, July 13, 2012

Does Free Trade Reduce the Female/Male Wage Gap?

International trade and industrial organization are two fields that are merging.   This new NBER paper now brings some labor economics into this new "big tent".   As I understand it, the basic point is that trade liberalization between nations (think of NAFTA) entices new firms to enter the industry.  New firms operate in new factories with cutting edge technology.  The authors find evidence that these new firms need less "muscle" on the job (perhaps because new robots are moving stuff around) and that women have relatively more opportunities at such firms relative to the old "Archie Bunker" firms.  If women have greater opportunities at new firms (because of the robot effect) and if new firms are gaining market share, then the average male/female wage gap declines and this is due to international trade.

In my work on international trade, I have focused on the environmental consequences of such trade and in particular how it affects the lifespan of used vehicles.   and how international trade between poor nations and rich nations can cause the rise of the "green economy" by lowering the price of wind turbines and solar panels.   

I must admit that I'm looking forward to learning some more economics next week.   To get a taste of what papers I may try to listen to at NBER, take a look at the environmental meetings, the urban meeting and the housing crisis meeting.