Principal investigator: Silvio da Rosa Paula
Article title: GENDER WAGE GAPS AND WORKER MOBILITY: EVIDENCE FROM THE GARMENT SECTOR IN BANGLADESH
Article authors: Andreas Menzel and Christopher Woodruff
Location of the intervention: Bangladesh
Sample size: Administrative records of over 80.000 workers from 70 large export garment factories.
Main theme: Genre
Type of Intervention: Assessment of gender pay disparities
Main Variable of Interest: Gender pay disparities
Evaluation method: Experimental Evaluation (RCT)
Evaluation Context
Most of the literature on gender wage disparities is based on data from high-income countries. Evidence for developing countries is very sparse, largely due to a lack of quality data. Given this reality, this study addresses the issue of gender wage disparities using administrative records from over 80.000 workers in 70 large export-oriented garment factories in Bangladesh, covering the period from 2012 to 2017.
The garment industry in Bangladesh is the largest manufacturing sector, accounting for 80% of the country's exports and about 12% of its GDP. The sector's 4.000 factories employ 4 million workers, more than half of whom are women. With annual growth of around 15% over more than two decades, the garment industry has dramatically increased the proportion of women working in full-time paid jobs.
However, there is widespread criticism of export manufacturers for failing to safeguard labor and environmental standards. The size of the sector in the country exploits the comparative advantage of cheap unskilled labor and its employment of a large number of female workers, making this environment particularly suitable for studying broader social effects of interest, such as the wage gap.
Methodology Details
To assess gender pay disparities, researchers used a standard panel data approach with fixed effects, employing a binary variable to identify whether the worker is male or female. Panel data allows for tracking workers over time, better capturing their behavior over the years and controlling for characteristics not observable through fixed effects, such as determination, effort, and motivation—characteristics that are difficult to measure. In general terms, using this method, researchers seek to identify a causal relationship between gender and wage return.
Intervention Details
For this study, data from monthly payroll records and skills assessments conducted by the factories' industrial engineering departments were used. The payroll data includes all workers employed by the factories for at least one day. In general, workers in the factories are classified into 7 levels, with level (7) being the lowest, assigned to unskilled, entry-level workers called basic-level helpers. From level (3) onwards, workers are considered highly skilled operators. Levels (1) and (2) are senior supervisory personnel and line supervisors, respectively. Due to limitations, the estimates only include operators from levels (6) to (3), randomly selected from specific production lines. It is important to note that Bangladesh's minimum wage law for the garment sector prescribes a minimum wage for each worker level, although workers at a given level generally receive slightly more than the respective minimum wage.
In the context of skills information, some factories conduct regular skill assessments of operators. Therefore, using information from 20 factories, researchers created metrics to map workers' production capacity, providing more precise control over their productivity. Finally, in addition to salary records and skill measurements, data from a sample of randomly selected sewing machine operators from each factory were also used, encompassing a total of 2.607 workers.
Results
The results indicate that women's salaries are on average 20% lower than men's, and even within a restricted set of occupations, men earn on average about 8% more than women. Furthermore, the data show four clear patterns. First, women earn less than men, even with similar skill levels. Second, for both men and women, a considerable portion of salary increases is associated with movement between factories. Third, women have shorter careers in the sector and lower rates of mobility between factories, although this does not appear to be related to marital status or pregnancy, or a lack of employment options outside the garment sector. Fourth, women also have lower promotion rates; for example, only 32% of women reach one of the two highest operator levels, while this percentage is 57% for men.
In general terms, the results indicate that men's longer careers in the sector explain about half of the wage gap, with the other half due to differences in internal promotions and mobility between factories. Furthermore, the study shows that married men pursue their careers more proactively. These results are consistent with gender norms that broadly affect women's bargaining position or access to the labor market, as already reported in other research. For Bertrand et al. (2015), women may reduce their careers so as not to earn more than their spouses. In Macchiavello's study et alIn 2016, researchers report the existence of negative beliefs that women are less capable supervisors. In Glover's work... et al. (2017), female supermarket employees from minority backgrounds in France reduce their effort when working under biased managers. Such patterns, and the presence of women in less than 7% of supervisory positions in the clothing sector, may indicate that efforts to advance in their careers generate lower returns for women, thus reducing their professional ambitions.
Lessons in Public Policy
Gender parity is fundamental to the prosperity of economies and societies. Considering that women represent half of the world's population, developing and deploying these available talents has a huge influence on the growth, innovation, and competitiveness of economies and businesses.
In Brazil, despite Article 7 of the Federal Constitution guaranteeing equal pay regardless of gender, age, race, or marital status, a 2019 study by the Brazilian Institute of Geography and Statistics (IBGE) showed that women earn less than men in all occupations selected for the research, with the difference varying only in intensity between occupations. Even with a decrease in wage inequality between 2012 and 2018, female workers earn, on average, 20,5% less than men in the country.
Furthermore, a study included in the 2019 World Economic Forum (WEF) report, compiled from data from 153 countries, shows that Brazil ranks 130th in the ranking that analyzes wage equality between men and women with similar work, demonstrating that Brazil still has a long way to go.
Reference
MENZEL, Andreas; WOODRUFF, Christopher. Gender wage gaps and worker mobility: Evidence from the garment sector in Bangladesh. National Bureau of Economic Research, 2019.
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