Gender, Informal Employment and Trade Liberalization in Mexico

We study how import liberalization affects formal employment across gender. The theory offers a mechanism to explain how male and female formal employment shares can respond differently to trade liberalization through labor reallocation across tradable and non-tradable sectors. Using Mexican data over the period 1993-2001, we find that Mexican tariff cuts increase the probability of working formally for both men and women within 4-digit manufacturing industries. The formalization of jobs within tradable sectors is driven by large firms. Constructing a regional tariff measure, we find that regional exposure to import liberalization increases the probability of working formally in the manufacturing sector for both men and women, and especially for men. However in the service sectors, the probability of working formally decreases for low-skilled women.

Ben Yahmed, Sarra and Pamela Bombarda (2019), Gender, Informal Employment and Trade Liberalization in Mexico, The World Bank Economic Review 34(2) , 259-283