Trade and Labor Market Outcomes: Does Export Sophistication Affect Women’s Wage Employment?

We explore whether improved export sophistication increases women’s participation in wage employment. Using panel data from a large group of developing and emerging economies, and Fixed-effects and Generalized Method of Moments (GMM) estimators, we find that export sophistication has significant and mostly positive effects on women’s participation in paid employment in all regions, but these effects are nonlinear, since they become positive only after a threshold level of sophistication is attained. We also find stronger positive impacts of export sophistication on women’s share of wage employment in sub-Saharan Africa (SSA) and Latin America relative to other regions. Additionally, and after accounting for the impact of export sophistication, we find that openness to trade has a positive effect on women’s share of wage employment through its interplay with high levels of foreign direct investment (FDI). The evidence for an independent positive effect from trade is less robust (it is only robust in the GMM estimations), but there are significant regional differences. Notably, we find a robust negative independent (direct) effect in North Africa and a positive impact in SSA.