Nguyen Van Tran

How does trade liberalization influence household decisions regarding quality and quantity choices? This paper assesses the underexplored effects of a large positive trade-induced price shock on household decisions regarding fertility and education investments and the mechanisms underpinning these effects in the context of Vietnam's trade liberalization in the 1990s. Specifically, I construct the positive trade-induced price shock, and estimate the effects of this shock at the household and individual levels. I find robust evidence that a significant decline in the desire for children was driven by an increase in the trade-induced price shock. However, this shock also significantly contributed to an increase in the probability of children attending school. These results are robust compared to a variety of alternative indicators. I show several economic mechanisms possibly driving these findings through the high opportunity cost of time and structural economic changes. Overall, the analysis highlights the importance of the hypothesis that a country with a comparative advantage in female-labor intensives in the agriculture sector is characterized by improving human capital investment and decreasing fertility in response to trade liberalization.

Keywords: Trade liberalization; Fertility transition; Human capital investments; Opportunity cost of time; Structural change; Labor supply; Vietnam

Winner or Loser? Gender-Specific Labor Market Adjustments and Trade Liberalization (Working paper) (Author, 2023)

Abstract:

This article investigates the effects of a positive trade shock on female and gender-specific local labour market outcomes, employing a novel combination of nationally representative household surveys and firm-level data. I explore Vietnam’s early 2000s trade liberalisation, which generated an exogenous positive labour market shock in regions more exposed to export goods. Results indicate that female workers in regions more exposed to tariff reductions experienced increased wage growth but were significantly less likely to adjust to positive trade shocks compared to men. Consequently, the gains for men were approximately double those for women, leading to a widening of the gender wage gap. However, no gender differences regarding the effects of the trade shock on working hours were observed. The results also suggest that females were more likely to transition from unpaid family work to formal and skilled sectors, with these effects being more pronounced than for men. On the demand side, firms in regions more exposed to tariff reductions exhibited increased growth in female employment and wage per worker, while the effects on male employment were uncertain. Additionally, larger firms with male dominance pay higher wages than smaller firms, and gender occupation segregation increases, highlighting additional avenues through which trade can influence gender-specific outcomes. In overall, Our results suggest that both pull and push factors induced workers to participate in the market.

Sudden liberalisation and firm adjustments and health outcomes (Working in process)

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