Abstract: In this paper, I develop a monopolistically competitive trade model that combines the "taste for discrimination" model of Becker (1957) and the trade model developed in Krugman (1980) to explain the conflicting empirical results concerning trade's impact on gender wage gaps found in Black and Brainerd (2004), Menon and Meulen Rodgers(2009), and Ben Yahmed (2011). I demonstrate that, under certain conditions, the gender wage gap will rise when there is an increase in trade due to a fall in fixed export costs, while the gender wage gap will fall when there is an increase in trade due to a fall in iceberg trade costs. I then explore the various competitive effects that lead to these results, and show that small trade costs are sufficient, but not necessary, for there to be aggregate welfare gains when consumers move from autarky to trade.
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Recipient
Scott Orr