Taking gender differences in bargaining power seriously: Equity, labor standards, and living wages.

Expanding women’s outside options, including paid work at living wages, is a mechanism for improving their well-being. But in developing countries, the dual phenomenon of women’s segregation in export industries and increased firm mobility constrain women’s ability to improve their wages, work conditions, and to bargain for more secure jobs. Efforts to bargain for higher compensation can lead to employment losses, if firms relocate to lower wage sites. These structural factors, rather than gender gaps in education, are largely responsible for persistent wage inequality. The World Bank views trade and market liberalization as unambiguously beneficial mechanisms to improve women’s relative status, but this view must be questioned in light of the structural conditions faced in labor markets. 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 negative effects on output and employment? This paper seeks to answer that question, and considers the macro level policies that might be pursued in order to overcome structural impediments to gender wage equity.