Gender-Segmented Labor Markets and Foreign Demand Shocks

TL;DR

This paper develops a theory linking gender-segmented labor markets with foreign demand shocks, showing that such shocks can either increase or decrease the female-to-male employment ratio depending on sector gender composition, and confirms this with empirical evidence from Tunisia.

Contribution

It introduces a novel theoretical framework connecting gender segmentation and foreign demand shocks, and provides empirical validation using Tunisian labor market data.

Findings

Foreign demand shocks in female-intensive sectors increase female employment.

Shocks in male-intensive sectors decrease female employment.

Empirical results align with the model's predictions in the Tunisian context.

Abstract

Gender segmentation in labor markets shapes the local effects of international trade. We develop a theory that combines exports with gender-segmented labor markets and show that, in this framework, foreign demand shocks may either increase or decrease the female-to-male employment ratio. If a foreign demand shock happens in a female-intensive (male-intensive) sector, the model predicts that the female-to-male employment ratio should increase (decrease). We then use plausibly exogenous variation in the exposure of Tunisian local labor markets to foreign demand shocks and show that the empirical results are consistent with the theoretical prediction. In Tunisia, a developing country with a high degree of gender segmentation in labor markets, foreign-demand shocks have been relatively larger in male-intensive sectors. This induced a decrease in the female-to-male employment ratio, with households likely substituting female for male labor supply.