The Decussation of Gender Wage Discrimination and Global Value Chains: A General Equilibrium Analysis

The research voices a two-fold attempt: the effect of global value chain (GVC) on the sustenance of gender-based inequalities and its reverse impact on higher gender-based discrimination in trade in GVC. In the theory of discrimination, it has been pointed out that an increase in market competition may drive out discrimination (Arrow, 1971; Becker, 1957; Goldin, 1990). This chapter tests the conjunction of the literature of discrimination and trade in the backdrop of GVC. The questions that we attempt to address are: first, whether trade in forward GVC or backward GVC mitigates or accentuates gender-based disparities? Second, whether trade in GVC that leads to an increase in market competition can contradict the Becker–Arrow–Goldin hypothesis? And finally, whether an exogenous increase in discrimination promotes or discourages GVC trade? We build a 3 × 3 Jonesian general equilibrium model with heterogeneity in the labor market. Discrimination between male and female labor is captured by the Beckerian wage markup of the male wage over the female wage. For generality of the model, it is assumed that while discrimination persists in two sectors of the economy employing unskilled labor, the other sector employing high-skilled labor is nondiscriminatory. Additionally, across the discriminatory sectors, the magnitude of discrimination is nonuniform. Interestingly, we obtain that in a labor-intensive GVC sector, capitalists prefer discrimination in the GVC sector over trade participation in GVC, whereas in a non-GVC capital-intensive sector, capitalists become indifferent over trade participation in GVC and discrimination in the non-GVC sector.