Can Trade Policy Change Gender Equality? Evidence from Chile

Do fi rms reorganize gender composition of their employment in response to atrade shock? Using novel data on gender composition of employment across severaloccupational groups for Chilean manufacturing firms for 1995-2007, a developingcountry with low gender equality, and utilizing the 1999 Chile-Mexico Free TradeAgreement (FTA) as the quasi-natural shock, we document the first evidence that theshare of female white-collar workers increase by 3% for exporters (as opposed to non-exporters)after the trade agreement. This increase happens through a substitutioneffect from male to female high-skilled workers caused primarily due to higher use oftechnology and non-production tasks by an exporter: technological adoption (bothforeign and domestic), innovation, and publicity and promotional expenses. We alsoshow that around 4% of the productivity increase due to the FTA can be attributedto the reduced gender-gap in white-collar employment. Lastly, this increase in femalewhite-collar workers holds for (a) both ex-ante and new exporters, and (b) firms withboth male and female owners. Overall, we show that trade can play an importantrole in addressing gender gap in employment