Foreign Trade and Men and Women’s Employment and Earnings in Germany and Japan

This paper provides an empirical analysis of the effects of foreign trade expansion on men and women's employment and earnings in Germany and Japan since the early-1970s. The analysis is prompted by trade studies identifying manufacturing industries appearing most vulnerable to foreign trade, industries in which German and Japanese women are disproportionately represented. Evidence is found that foreign trade expansion had a more adverse effect on women's than men's manufacturing employment in Japan and a more equal effect in Germany. In spite of this, demand shifted away from women's employment in Germany after the early-1970s, for both the manufacturing sector as a whole and for manufacturing industries with high female percentages of employment. No such demand shifts occurred in Japan. In the face of these differences in demand and of remarkable similarity in female labor supply, male-female wage differences narrowed in Germany and widened in Japan, for both manufacturing and non-agricultural employees. These diverging patterns of male-female wage differences are explained by the more marginal basis on which Japanese women were integrated into the workforce, reflected in the character of women's part-time and temporary employment as well as union representation. To some extent, the more marginal basis on which Japanese women were integrated into the workforce resulted from the explicit policies of Japanese firms, referred to as "Operation Scale-Down" (genryo keiei). In Germany, too, the character of women's integration into the workforce appears to result in part from explicit policies undertaken by The Federation of German Trade Unions (Deutscher Gewerkschaftsbund), the largest German federation of unions.