Widening the Border: The Impact of NAFTA on Female Labor Force Participation in Mexico

The impact of the 1994 North American Free Trade Agreement (NAFTA) on relatively disadvantaged groups, including Mexican women, has provoked heated debate for over a decade and continues to divide opinions on NAFTA’s merits. This study uses a differences-in-differences approach to examine how NAFTA affected the female labor participation rate (FLP) in different Mexican regions. NAFTA increased FLP only in central Mexico, through the creation of female employment opportunities. Specifically, NAFTA caused female intensive export production to expand in central Mexico, and reduced the ability of domestic firms to discriminate against women by increasing product market competition.