Taking Gender Differnces in Bargaining Power Seriously: Equity, Labor Standards, and Living Wages

Gender inequality is linked to women’s unequal bargaining power in the household. Greater equity can be achieved by expanding women’s outside options. Paid work is a likely mechanism for improving women’s household bargaining power. But the dual phenomenon of women’s segregation in export industries in developing countries and increased firm mobility result in their unequal bargaining power vis a vis employers. This reduces the ability of women to bargain for higher wages, more secure jobs and better work conditions, in turn limiting the potential positive impact of outside income on household bargaining power. A major constraint is that if women do succeed in bargaining for higher compensation, employment losses will results, as firms relocate to lower wage sites. The World Bank takes seriously the limits on women’s household bargaining power but not the gap in labor markets, and thus the Bank naively proposes that trade and market liberalization are unambiguously beneficial mechanisms to improve women’s well being. Since outside income has been shown to improve gender equity, what can be done to raise women's relative wages and improve labor standards while avoiding the negative effects on output and employment? This paper seeks to answer that question, and considers the macro level policies and approaches that might be pursued in order to overcome structural impediments to gender wage equity. JEL Codes: F4 Macroeconomic aspects of international trade J3 Wages, compensation and labor costs J8 Labor standards O11 Macroeconomic analyses of development TAKING GENDER DIFFERNCES IN BARGAINING POWER SERIOUSLY: EQUITY, LABOR STANDARDS, AND LIVING WAGES The relative wages of men and women...are...largely determined by the structure of markets...Firms operating in competitive environments discriminate less against women in hiring and pay practice than do firms with significant market power in protected environments...(World Bank, Engendering Development, p. 17). Making trade conditional on such (labour) standards may benefit many of the workers in the north and a few in the south but it is also likely to further marginalize large sections of the world’s poor, particularly in the south. A win-win solution in international trade may still be possible but it is unlikely to arise out of ad hoc, piecemeal and self-serving demand for universal labour standards, which take no account of differences in the capacity of different countries to observe them...We have to recognize that the interests represented in negotiations around labour standards have not only been largely northern, but also largely male (Naila Kabeer, Power to Choose, pp, 391, 400).