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Fridays Academy: Gender and Macroeconomic Management

Ignacio Hernandez's picture

As usual on Fridays, from Raj Nallari and Breda Griffith's lecture notes.

 

Empirical Evidence on Impact of Globalization on Women

Available studies and data, which are rather limited, is arranged around some broad themes and discussed below and next week.  Little is known about the impact of macroeconomic policies on women, such as changes in exchange rates, interest rates, minimum wages, and commodity prices.

 

Exchange rate fluctuations

These are common in developing countries while responding to shocks usually emanating from policies in G-3 countries.  Exchange rate fluctuations impact upon domestic investment, prices of tradables, and wages, particularly in more competitive industries, such as textiles, garments, agro-processing, cut-flowers, and low value-added manufacturing goods.  Goldberg (2001) and Tracy find some evidence from the United States that exchange-rate shifts impact upon: (i) the wages of women who remain with their same jobs, (ii) the wages of women who change jobs, and (iii) the frequencies of job-changing.  For example, a 10-percent depreciation of the dollar, for example, is estimated to raise women's wages by roughly 1 percent. However, for women who have changed jobs, the estimated wage increase is over 2 percent, while for women who stay on their jobs the estimated wage increase is 0.75 percent. For both men and women, the strongest effects of exchange rate volatility are observed among the less-educated workers.
 

Factor Mobility

As explained before, in general, capital and skilled labor do not migrate from developed to developing countries but amongst developed countries only.  Skilled labor migrates from developing countries to developed countries.   There is some evidence of capital flight from developing to developed countries particularly during crises and instability.  As globalization progresses, because of the ‘paradoxical or perverse’ transmission flows of skilled labor and capital there is increasing likelihood that developed countries are likely to have lower income inequality while developing countries may have higher inequality.  As women are generally less skilled and less mobile within countries and across countries, they are additionally disadvantaged.  However, with multi-national corporations (MNCs) relocating to developing countries, women could benefit in terms of jobs and wages.  In practice, it is observed that developing governments are afraid of MNCs moving out of their country, and therefore do not adequately enforce labor (and child) regulations, which increases the likelihood of women not benefiting in terms of higher wages.

 

                                                                                                                                                                                                              Source:  Rajan et al (2007) in Finance and Development, IMF. March 2007

 

 

 

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