When does exporting increase women’s employment in the developing world

During the last two decades, the share of merchandise exports in global GDP has increased from 43 percent in 1995 to nearly 60 percent in 2017. However, evidence on the link between international trade and women's employment is limited to developed countries or to a handful of developing countries. A study by Amin and Islam (2023) attempts to fill this gap in the literature by using firm-level survey data on 29,962 registered private manufacturing firms across 141 developing and emerging countries. The study goes beyond estimating the overall relationship between the share of direct exports in the firm's total annual sales and the share of women workers in the firm's workforce. It explores various heterogeneities in the relationship, aiming to uncover the intricate channels through which exports impact women's employment.

Main Findings

1. There is a positive, economically large, and statistically significant relationship between the share of exports and the share of women workers in a firm.A baseline estimate is that firms that export all their output have, on average, about 6.6 percentage points more women workers versus firms that do not export at all. A roughly similar difference emerges between firms that export more than 50 percent of their output and the rest (figure 1). The positive relationship between exports and women's employment cannot be explained by differences in firm size or age, industry, GDP per capita, or the share of women in the total population.

1. The positive impact of exports on women's employment is much larger the lower the level of competition in the countries' domestic market(figure 2). This is an important finding for several reasons. Competition is an important deterrent to discrimination, and competitive forces can be generated locally or internationally through trade. What is uncovered is that competitive forces from trade (through exports) are quite effective in attenuating discrimination, even more so when competition is weak in domestic markets. Essentially, starting from a lower base of competitive markets (low domestic competition) means the impact of exposure to international competitive markets (through exports) is far greater in reducing discrimination. This is important as increasing domestic competition may be harder to achieve by policy makers than exposing businesses to international markets.

1. While exports may increase the demand for women workers, favorable supply-side factors are important in affecting the equilibrium increase in women's employment. Consistent with this viewpoint, Amin and Islam (2023) show that the positive link between exports and the share of women workers in a firm is significantly stronger when social attitudes are more favorable toward women's work outside the home, laws on worker mobility do not discriminate (or discriminate less) against women, and there is less reported crime (see figure 3).

Key Policy Lessons

Exports can play an important role in providing more formal sector manufacturing jobs for women. Thus, export promotion policies may be considered for boosting women's employment. However, as Amin and Islam (2023) show, some caution is necessary against a blanket use of exports for boosting women's employment. Exports help boost but only when social attitudes toward women's work outside the home are sufficiently favorable, the law and order situation is sufficiently good, and laws on women's mobility are not too discriminatory. Exports are also more effective when competition in domestic markets is low but not much when it is high. Tailoring context-specific policies complementary to export promotion may help boost women's participation in labor markets.