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Rotman Insights Hub | University of Toronto - Rotman School of Management

How does trade globalization impact women?

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Pamela Medina Quispe

As Chinese import competition and trade increased in Peru, work for women dried up, leading to a one per cent drop in Peruvian women working in 2008 compared to 1998. Sectors focused heavily on international trade had an even bigger drop, with a 3.7 per cent decline in employment for women with less education. And once those women were out of work, they were much less likely to get married, according to research from assistant professor of economics Pamela Medina Quispe.

“In the 2000s in developing countries, there is no market that had as big of an impact as China,” says Medina Quispe. Between 1998 and 2008, there was a 1,416 per cent increase in the value of imports from China to Peru. By 2008, incoming trade from the Asian country rose to US$3.2 billion, from US$213 million just 10 years earlier, according to the United Nations Comtrade dataset. In that same time period, the combined value of imports from all other countries in the world to Peru increased just 156.7 per cent to US$20 million.

Working with professors Hani Mansour and Andrea Velasquez, both from the University of Colorado-Denver, Medina Quispe explored the impact of trade with China following its accession to the World Trade Organization in 2001. The first paper from the research, “Import Competition and Gender Differences in Labor Reallocation” published in the Labour Economics journal in 2022, examined how women’s employment declined following the WTO accession. A follow-up paper, forthcoming in the Journal of Globalization and Development, explores the long-term demographic impacts of that drop in employment.

“There is not a lot of research that concentrates on how women were impacted by trade, and we wanted to know once you are displaced, what else are you losing?” says Medina Quispe.

As Chinese imports began to dominate, local manufacturers shed jobs equally among men and women. Certain sectors, such as mining and chemical industries, eventually re-hired locally. Since these industries were dominated by males, there was only a short-term dip in employment for Peruvian men.

In contrast, women were not rehired in their old industries, which shrank. Compounding the issue, many weren’t given new opportunities in the growing tradable industries — employment sectors focused on goods and services that a country can trade internationally. Between 2004 and 2008 the percentage of Peruvian women in tradable employment sectors — such as metal mining, manufacturing and chemicals — saw a slight decline to 27.8 per cent, from 27.9 per cent, despite overall growth in the country’s employment rate.

Many women were further pushed into non-tradable sectors (which are heavily composed by service sector jobs such as retail). During that period, the number of low-educated women in non-tradable sectors increased to 39.5 per cent, up from 37.6 per cent. (In comparison, those with a high school degree or greater saw their participation in non-tradable industries hold steady at 62.5 per cent.)

Many Peruvian women who managed to re-enter the labour market did so through the informal or service sector, and Medina Quispe highlights that these are often low-paying jobs without insurance or employment protections.

And, following this import competition shock, many women weren’t able to find any work at all. “Women ended up leaving the labour force altogether,” says Medina Quispe. While the loss of that labour and talent had a negative impact on the economic growth of the country overall, “there are consequences for women that go beyond the economic affects,” she adds.

After 2008, the Peruvian population saw an 11 per cent jump in the number of single women with less education between the ages of 25 to 55, and an overall one per cent decline in the marriage rate, according to Medina Quispe’s follow up paper. (People with a high school degree or more did not see their marriage rates change.)

The researchers also found that after losing their jobs, there was suggestive evidence of a decrease in the number of births per 1,000 women for those with less education in 2008 compared to 2000. And women began having children later, with the average age of new moms shifting to between the ages of 35 to 45.  

Medina Quispe posits that this is a result of a lack of government safety nets in Peru. Without income, health insurance or maternity leave, women are less likely to choose to move forward in their personal life. In comparison, women in countries with robust government safety nets, such as Denmark, were more likely to have an additional child following increased import competition in their countries, according to forthcoming research paper from Wolfgang Keller and Hale Utar.

To deal with these issues moving forward, Medina Quispe suggests that the Peruvian government needs to provide specific programs to help women access formal employment in the tradable or non-tradable sectors.

While the government offered broad incentives and training programs to everyone out of work due to globalization efforts, many of the training programs focused on the male-heavy tradeable sectors. As a result, men were often able to take greater advantage of these programs, giving them a bigger boost in industries in which they already dominated.  

“This isn’t necessarily discrimination, but the economy was created in a way that favours the resilience of men over the resilience of women,” says Medina Quispe.

Pamela Medina Quispe is an assistant professor of economic analysis and policy at the University or Toronto Scarborough, with a cross appointment to the Rotman School of Management.