Documentos de Trabajo

Transcription

1 Documentos de Trabajo Trade Openness and Gender n Uruguay: a CGE Analyss María Inés Terra, Marsa Buchel y Carmen Estrades Documento No. 24/07 Dcembre, 2007

2 Trade Openness and Gender n Uruguay: a CGE Analyss 1 October 2007 María Inés Terra, Marsa Buchel, Carmen Estrades 2 1 Ths work was carred out wth nancal and scentc support rom the Poverty and Economc Polcy (PEP) Research Network, whch s nanced by the Australan Agency or Internatonal Development (AusAID) and the Government o Canada through the Internatonal Development Research Centre (IDRC) and the Canadan Internatonal Development Agency (CIDA). The authors acknowledge the collaboraton o Rodrgo Cen who partcpated n derent phases o the study. We are very thankul or the comments receved rom Marza Fontana, Wlredo Maldonado, Masakazu Watanuk, André Lemeln and Renato Flores, Bernard Décaluwé, Ismaël Foana, Veronque Robchaud, John Cockburn and Slva Laens. All remanng errors and omssons are our own responsblty. 2 Departamento de Economía, Facultad de Cencas Socales, Unversdad de la Repúblca, Uruguay. E-mal addresses: terra@decon.edu.uy; marsa@decon.edu.uy, carmen@decon.edu.uy.

3 Abstract In ths paper we analyze the gender derentated mpacts o trade openness n Uruguay usng a gender aware CGE model wth endogenous labor supply and a home producton uncton. We smulate complete trade lberalzaton and an ncrease n tars to the level o Trade lberalzaton ncreases emale employment and wages, reducng the gender wage gap. These ndngs are consstent wth Çagatay (2001) and Foana et al (2003). The eect o trade openness on tme dstrbuton o workers s derent by sklls. Sklled workers, manly women, reduce tme spent n lesure and domestc work ncreasng labor supply. In contrast, unsklled workers ncrease lesure tme, especally men. Trade openness leads to a more equtable dstrbuton o tme spent n domestc work. When there s a more mperect substtuton among genders n the home producton uncton, women reduce more lesure tme. The ncrease n tar to the level o 1994 has the opposte results. Keywords: trade openness, gender, general equlbrum model, home producton, lesure, wage curve JEL classcaton: D68, D13, J16, J22, F16 Resumen En este trabajo se analzan los eectos derencados por género de una apertura comercal en Uruguay, usando un modelo de equlbro general computable que consdera la dmensón de género. El modelo ncorpora además una oerta de trabajo endógena y una uncón de produccón de benes doméstcos. En el marco de este modelo, se smula una apertura comercal total y un ncremento de aranceles al nvel vgente en Los resultados muestran que una apertura comercal aumenta el empleo y los salaros emennos, reducendo la brecha salaral de género. Estos resultados son consstentes con Çagatay (2001) y Foana et al (2003). El eecto de una apertura comercal sobre la dstrbucón del tempo de los trabajadores es derente por nvel de calcacón. Los trabajadores calcados, especalmente las mujeres, reducen el tempo dedcado al oco y al trabajo doméstco ncrementando su oerta laboral. Por el contraro, los trabajadores no calcados aumentan el tempo de oco, en especal los hombres. La apertura comercal lleva a una dstrbucón más equtatva del tempo dedcado a tareas doméstcas. Cuando hay una susttucón más mperecta entre hombres y mujeres en la uncón de produccón doméstca, las mujeres reducen en mayor medda el tempo dedcado al oco. Un aumento de los aranceles al nvel vgente en 1994 tene resultados opuestos. Palabras clave: apertura comercal, género, modelos de equlbro general, uncón de produccón doméstca, oco, curva de salaros 1

4 1. Introducton Uruguay s a small Latn Amercan country that has strong comparatve advantages n agrculture. In the 1990s unlateral trade lberalzaton and ntegraton wth MERCOSUR partners led to a sgncant reducton o protecton to the domestc market. As a consequence, there was a change n relatve prces and a reallocaton o resources rom manuacture to servce sector. Women partcpaton n labor market ncreased, although there s evdence that n 2003 women assgn less tme assgned to labor market than men, whle the opposte happens wth tme assgned to domestc work. Addtonally, some studes conclude that gender dscrmnaton n the labor market perssts. In prncple, a country may benet rom trade openness because t causes an ncrease o trade and productve specalzaton. Productve ecency ncreases due to a better resource allocaton and at the same tme, welare rses through an mprovement o consumpton possbltes. Furthermore, when mperect competton exsts, openness may report addtonal benets through the access to a larger varety n consumpton o derentated goods, the use o economes o scale and the all n prces nduced by the declne o monopoly rents. However, nternatonal trade leads to changes n relatve prces o goods, n relatve demands o productve actors and as a consequence, n ther relatve remuneraton. Ths means that we may expect changes n ncome dstrbuton. In partcular, trade openness may have gender-derentated eects. There are three derent mechansms through whch trade openness aects labor market by gender. Frst, the gender dstrbuton o the mpact n terms o employment wll depend on the sectoral ntensty n the use o male and emale labor. I trade openness benets sectors ntensve n male (emale) labor, men (women) employment wll mprove. The second mechansm stems rom ths eect. Indeed, the changes n the relatve demand by gender aect the earnngs gender gap. Thereore, we may expect that a emale ntensve sectors growth would decrease the gender gap. Anyway, labor dscrmnaton wll contrbute to wden or reduce the eect on the gender gap. A thrd source comes rom the change n labor supply nduced by modcatons n employment opportuntes and wages. Thereore, t s mportant to evaluate the ntra-household reallocaton o resources. Other aspects, such as publc provson o socal servces, mght also be aected, but emprcal studes rarely ocus on them. Most o the emprcal work study whether trade 2

5 polces aect women s employment relatve to men and the earnngs gender gap. In contrast, evdence about the eects on the tme allocaton among household members s less requent. Some gender-aware CGE models allow to measure these three sources o mpact va ncorporatng a home producton uncton and three actvtes to spend tme n (market work, domestc work and lesure) as proposed by Fontana and Wood (2000). Followng ths strategy, derent results were obtaned or Nepal (Foana, Cockburn and Décaluwé, 2003), South Arca (Foana et al, 2005), Pakstan (Sddqu, 2007), Bangladesh and Zamba (Fontana, 2003), when smulatng an abolton o tars. In the ve countres, tme o women n labor market rses but the gender wage gap decreases only n three o them. The eect on domestc work and lesure s nether conclusve. For example, n Bangladesh, the ncrease n the opportunty cost o workng or women due to the declne o the gender wage gap- leads to some substtuton o male and emale n home producton. In Nepal, n spte o a declne o the gender wage gap, women do not benet wth a reducton o tme spent n domestc work. In act, emale entrance to the labor market s accomplshed wth a decrease o lesure tme as men s lesure tme rses. Thus, trade openness seems to have more equtable eects n Bangladesh. The am o ths paper s to analyze the gender-derentated eects o complete trade openness n Uruguay, ollowng the methodologcal strategy pursued by the above mentoned lterature. Speccally, we study the eects on wages, employment, allocaton o tme between labor market and domestc work, and ncome dstrbuton, usng a genderaware CGE model. The paper s organzed as ollows. Frst, we present an ntroducton to the Uruguayan economy n general and to labor market n partcular. Secondly, we present the model and the data we use. Then, we analyze the results o three derent trade polcy scenaros. Fnally, we draw some conclusons. 2. The Uruguayan Economy 2.1. Trade openness Uruguay s a small country whose populaton - about 3.4 mllon n lve mostly n urban areas (92 percent). Tradtonally, producton and exports have reled on 3

6 agrculture, husbandry and meat processng. As many Latn Amercan countres, n the 1990s Uruguay underwent through an mportant process o trade openness and lberalzaton o captal markets. Although the lberalzaton process had started n the 1970s, t deepened n the 1990s. From 1990 to 1995 there was a sgncant tar reducton as a result o unlateral trade lberalzaton and trade ntegraton wthn MERCOSUR (Common Market o the South). The two processes can be easly dented n gure 1, whch presents the average tar protecton wthn MERCOSUR and the average tar appled to the rest o the world. As we can see, the average protecton reduced sgncantly untl Although n the last ten years the average tar appled to mports rom the rest o the world has not been much moded, the ntra- MERCOSUR tar s practcally zero. 25 Fgure 1. Uruguay: Average tar protecton, Ad valorem tar Intra-MERCOSUR Rest o the world Source: Secretaría del MERCOSUR The process o trade openness aected labor market n many ways. Frst o all, there was an mportant restructure o employment. Manuacturng lost mportance both n GDP and employment: whle n 1990 the sector employed 23.3 percent o workers, n 1999 ths percentage ell to 15.9 percent. On the other hand, the share o servces and tradtonal export actvtes n employment ganed mportance. Second, the dsperson o labor earnngs ncreased. One o ts most mportant sources was the rse o the rewards to educaton. As addtonally unemployment and normalty ncreased aectng manly unsklled workers, we may nterpret that the relatve demand or sklled labor has ncreased. Casacuberta and Vallant (2004) argue that ths rse 4

7 was due to the adopton o new technologes -complementary to sklled labor- that was nduced by trade lberalzaton Gender n the Uruguayan economy Snce the mddle o the 1980s, women s partcpaton n the labor market has had an ncreasng trend meanwhle men s one have presented a lttle declne. Table 1 shows ths evoluton or the group o 18 to 54 years old: emale partcpaton rate rose rom 62 percent n to 72 percent n and male rate decreased rom 94 percent to 92 percent n the same perod. Table 1. Labor characterstcs o the group o 18 to 54 years old Women Partcpaton rate Unemployment rate 12,3 13,5 19,9 Employment rate Men Partcpaton rate Unemployment rate 6,2 7,5 12,0 Employment rate Wage gap (log derence) * All Prvate sector Publc sector * Only employees (sel-employment excluded) Source: Contnuous Household Survey There are several emprcal works ocusng on emale partcpaton n labor market n Uruguay that conclude that t ncreases wth the educaton level and decreases wth household s ncome and age. Besdes, t s lower or marred women and or women wth lttle chldren, although the lkelhood o partcpaton ncreases when chldren grow (Dez de Medna, 1992; De Sora, Rvas and Taboada, 2001). In a study restrcted to couples, Buchel (2002) ound that emale partcpaton s more lkely or women who lve wth nactve elderly people or whose husband s unemployed. Obvously, tme spent n labor market also depends on the lkelhood o beng employed. As shown n table 1, emale unemployment rate has been persstently hgher than male unemployment n spte o the ncrease o women labor market partcpaton. 5

8 Unemployment s partcularly hgh or non-sklled women who also suer a relatve hgh duraton o unemployment. Table 1 also reports the raw gender wage gap measured as the derence o the male and emale mean log hourly wage. The gap was postve n and snce then, has had a decreasng trend. In recent years, ts value has been close to zero. In spte o these gures, several studes pont out the presence o gender dscrmnaton n the labor market. Indeed, some Uruguay lterature ollows the sprt o Oaxaca s proposal to measure gender dscrmnaton. Accordng to ths proposal, the raw gender gap may be decomposed n two terms. One o them stems rom the gender derence n endowments and the other one, rom the gender derence n endowments rewards. The latter s a measure o gender dscrmnaton. The broad concluson o Uruguayan studes s that the raw gap cannot be totally explaned by endowments. Thereore, we may nterpret that there s labor market dscrmnaton. Accordng to Buchel and Sanromán (2005) the dscrmnaton measure ncreases throughout the wage dstrbuton. Furthermore, there s a sharp acceleraton n the upper dstrbuton, whch they nterpret as evdence o a glass celng. Rvas and Ross (2000) nd that the declne o the raw gap n the 1990s n the prvate sector was manly due to an mprovement o women s human captal and, n a less extent, to a change n endowments rewards. They conclude that at the end o the decade, dscrmnaton took account or more than 100% o the raw gender gap n the prvate labor market. Ths overall pcture does not t or publc wage earners. Rvas and Ross (2002) compare prvate and publc wage earners n the nnetes and conclude that gender dscrmnaton ncreased or the ormer but decreased or the latter. Furthermore, Amarante (2001) nds that at the end o the 1990s, there was not evdence o dscrmnaton n the publc sector. When employed, women and men present derent dstrbuton among occupatons and ndustres. In broad terms, we may say that women tend to concentrate n ewer jobs than men. Accordng to Amarante and Espno (2001), ths gender dstrbuton among occupatons relects a segregaton phenomenon and n the 1990s, t has had an ncreasng trend n the prvate wage earners labor market. In contrast, segregaton has been lower and stable n the publc sector. 6

9 Tme spent n non-remunerated work has been less studed than tme n labor market. There s a sngle survey n Uruguay that collects normaton about use o tme, carred out n Its man gures are reported n Agurre and Batthyány (2005). The survey or tme use does not collect normaton about educaton or ncome o the household. Thus, we match the data provded by ths survey and the Household Survey n order to estmate the amount o hours assgned to domestc and labor market work by gender and educatonal level. The methodologcal aspects about ths match are presented n the Annex 1. In table 2 we show the estmaton o the tme dstrbuton or women and men o 14 to 65 years old. We suppose that people regardless o ther sex or educaton level- assgn 10 daly hours to personal care, that s, a mnmum tme needed or sleepng, eedng, hygene and health care. Accordng to these estmatons, women spend 16% o ther tme n domestc work and 11% n labor market work. The dstrbuton s qute derent or men: the gures are 6% and 20%, respectvely. In contrast, the gender derence n tme assgned to lesure s not so mportant. We also report tme dstrbuton accordng to the worker s level o educaton. Regardless the educaton level, women assgn more tme to domestc work and men spent more tme at market work. Sklled women assgn more tme to market work than unsklled women, but nstead o reducng domestc work tme, they reduce lesure tme. Table 2. Tme assgnment o populaton between 14 and 65 years old by gender. In percentages All Less than 12 years o 12 years o schoolng or schoolng more Men Women All Men Women All Men Women All Market work Domestc work Lesure Personal care Total Source: Own estmatons based on Survey on the Use o Tme and CHS 3. Model and Calbraton The eects o trade lberalzaton on macro and mcroeconomc varables are estmated usng a CGE model. In ths secton we present an overvew o the model and ts 7

10 calbraton. The core model s based on Laens and Terra (1999, 2000) and Terra et al (2006). Its structure s qute conventonal n terms o the analyss o trade-related ssues but we work wth alternatve speccatons regardng the labor market n order to take nto account gender ssues. Speccally, we use three derent versons o the model: rst, we dsaggregate male and emale labor demand (model 1), second, we consder male and emale labor supply as endogenous (model 2) and thrd, we ncorporate domestc work n the model (model 3) Model The general structure o the CGE model s qute conventonal. Uruguay s assumed to be a quas-small economy (ollowng Harrs, 1984) that has three tradng partners: Argentna, Brazl and the rest o the world. The Uruguayan economy s explctly modeled, whle mport demand rom the tradng partners s assumed to be perectly elastc and export demand presents a downward slope that s a negatve uncton o export prces n Uruguay. We assume perect competton n all sectors, and goods are derentated by geographc orgn (Armngton, 1969). There are ten representatve households accordng to level o ncome. Government collects taxes, pays transers to household and buys goods. Government savngs s obtaned as a resdual. Complete core model and equatons are presented n Annex 2. The model presents two dstnctve eatures. In the rst place, the labor market module ollows a wage curve behavor speccaton, ntroducng unemployment, whch aects only unsklled workers, both men and women. There are derent nterpretatons about the exstence o a negatve relatonshp among wages and unemployment (Blanchlower and Oswald, 1994). One o them s the exstence o ecency wages, pad by rms n order to promote eort or reduce the quttng rate among workers. When unemployment rses the wage needed to promote workers ecency declnes. Secondly, we extend the model n order to allow the ntroducton o gender derences. The prevous CGE model versons dd not dsaggregate labor by gender and assumed labor partcpaton as exogenous. We relax these assumptons by steps as n Foana et al (2003, 2005). 8

11 Frst, n Model 1 we dsaggregate emale and men labor demand. Ths means to relax the assumpton o perect substtuton between men and women n producton. Followng Fontana (2001) we assume dentcal substtuton elastcty or all sectors. Gender segmentaton n the labor market allows assessng a derentated-gender mpact on wages and employment due to the changes n sectoral structure. There are ve actors o producton: sklled emale labor, sklled male labor, unsklled emale labor, unsklled male labor and captal. As the model has our types o labor, the average wage s a combnaton o sklled emale, sklled male, unsklled emale and unsklled male wage. Followng Laens and Terra (1999), we assume a nested producton uncton. At the top level, a Cobb Douglas uncton combnes ntermedate nputs and value added. At the second level, value added s composed by captal and labor. At the thrd level, labor s a composed actor o sklled and unsklled labor. Fnally, a new equaton that combnes labor by sex n order to get a composte labor by educaton s ncluded n the model. Fgure 2 presents more clearly the nested producton uncton or ths model. Fgure 2. Producton uncton o the rm 9

12 Labor by gender s combned ollowng a CES uncton: ws s, = In whch g ( wl ws s, g, s,.(1 + tac g, s, )) 1 θg θg. ξg 1/(1 θg ) s the wage or composte labor by sklls, wlg, s, are the wages or each labor type respectvely, tac s the labor tax rate, ξg s the dstrbuton parameter, and θg s the elastcty o substtuton between men and women. Subndex s reers to a subset that ncludes labor categores by sklls (sklled and unsklled), subndex g reers to labor categores by gender (male and emale) and subndex reers to sectors. Then, to get a actor o aggregated labor (l), labor by sklls s combned n the rm s producton uncton ollowng the CES uncton: w l = ( ws s s n whch wl,.) 1 θ. ξ θ 1/(1 θ ) s the wage or aggregated labor, ξ s the dstrbuton parameter and θ s the elastcty o substtuton between labor by skll. In a second step, we relax the assumpton o exogenous labor orce and we ntroduce non-labor market tme, whch s composed by both lesure and domestc work. Thus, Model 2 ntroduces the dea that men and women are not perect substtutes n nonlabor market. As we need to subtract rom the avalable tme the mnmum subsstence volumes o non-market work requred, we ollow Fontana and Wood (2000) who propose to x ths mnmum volume n 10 hours per day. Domestc work at home and lesure are ntroduced n the utlty uncton o the households, but we assume them to be perect substtutes. Each household maxmzes ts utlty subject to a budget constrant, whch ncludes market ncome earned by the household plus non-labor ncome. Utlty uncton s a Cobb Douglas uncton that combnes consumpton o lesure by type o labor (L) and o market goods (C) or each type o household: U = L mal, μ mal, L em, μ em,. C μ From the optmzaton o the utlty uncton, we can derve labor supply equatons (ls lab, ) and nal goods demand o households (c ): 10

13 ls lab, = max hs lab, μ lab,. y (1 td (1 μ lab lab, )(1 msav ). w lab ) Where max hs lab, s the maxmum hours avalable or lesure and work, and s consdered a xed parameter n the model, y 1 td )(1 msav ) represents households ( avalable ncome and w lab s the wage or each type o labor. c μ. y (1 td )(1 msav ) = (1 μ ). p lab lab, Fnally, Model 3 consders that households use part o ther tme to produce home goods, whch are consumed by themselves. Thus, we dstngush between lesure and domestc work. Addtonally, the model requres xng an elastcty o substtuton between male and emale labor n home producton. Followng prevous works (Fontana and Wood, 2000), we x t at a lower level than the elastcty o substtuton between men and women n labor market, n order to reproduce the rgdty o labor at the household level. In ths case, households utlty s a uncton o the consumpton o market produced goods, home goods (CZ) and lesure. U = L mal, μmal, L em, Labor supply s now: μ em,. CZ μz C μ ls lab, = max hs lab, lz lab, μ (1 lab,. y (1 td μ lab lab, )(1 msav ) μz ). w lab Where lz lab, s the tme used by derent labor categores to domestc work. The nal goods demand o households also changes: c μ. y = (1 (1 td μ lab )(1 msav ) lab, μz ). p And a new equaton that determnes demand o domestc goods s ntroduced: cz μz. y (1 td )(1 msav ) = ( 1 μ, μz ). pz lab lab 11

14 Home goods are produced and consumed by the same amly. Mnmzng the costs o producton o domestc goods subject to the producton uncton, we obtan the prce o domestc goods (pz ) and the demand o work or producton o domestc goods (lz lab, ): pz = lab αh 1/ ρ + 1 lab,. wl AH ρ / ρ + 1 lab ( ρ + 1) / ρ pz α lz =. AH. QZ h lab, lab, wl lab 1/ ρ + 1 ( ρ / ρ + 1) Where α s the share parameter n the CES producton uncton, AH s the h lab, scale p arameter and ρ = (1- σz )/ σz σz beng the elastcty o substtuton between derent labor categores n the domestc good producton uncton. Fnally, the equlbrum condton n the domestc good market s: QZ = cz In Annex 2 we present the calbraton o parameters o the three versons o the model. The model s run usng sotware GAMS (General Algebrac Modelng System) Calbraton We use data or year 2000 to calbrate the model, n the orm o a Socal Accountng Matrx (SAM). Changes to the orgnal SAM are descrbed n detal n Terra et al (2006). Bascally, t has 23 sectors o producton, one beng an normal sector that only produces or domestc market and the other one a publc sector. Then, t has three actors o producton -sklled labor, unsklled labor and captal-, two natonal nsttutons households, presented n ten representatve household accordng to level o ncome, and government- and three tradng partners Argentna, Brazl and the rest o the world. For the purposes o ths paper, we moded the core SAM n order to adapt t to the three speccatons o the model, ntroducng the gender dmensons by steps. 12

15 As model 1 consders our types o labor, we dstngushed them n the SAM, usng data rom the Contnuous Household Survey or year The actoral use o the sector s now the ollowng: Table 3. Labor ntensty by sector Sector o actvty Sklled emale Sklled male Unsklled Unsklled (SAM) labor labor emale labor male labor Total Agrculture Husbandry Forestry Other prmary Meat processng Dary products Rce Tannng Wood and paper Chemcals Ceramcs Export actvtes Non tradable actvtes Import actvtes Hotels and restaurants Health Other servces Constructon Renery Gas Trade and transport Inormal actvtes Average Source: SAM There are several male-ntensve actvtes, such as agrculture, husbandry and other prmary actvtes, whle health, export actvtes and other servces employ a hgher percentage o women. In act, emale labor s concentrated n ew sectors, as table 4 shows. The actvty other servces, whch ncludes prvate educaton, servces to rms and domestc servce, concentrates almost 50 percent o total emale labor. Ths gure s even hgher when we consder only sklled emale labor, whle unsklled women are employed n more actvtes, such as normal actvtes, trade and transport (bascally retal) and health. 13

16 Table 4. Concentraton o emale labor by sector o actvty. In percentage Sector Total emale Sklled emale Unsklled Share o Share o exports labor labor emale labor total exports to Argentna Other servces Health Inormal actvtes Trade and transport Rest o actvtes Total Source: SAM Table 5 presents how labor ncome by decles reles on the derent types o labor. As we can see, the mportance o emale labor ncome s hgher n the decles o mddle ncome, rom the ourth to the seventh decle. Ths s consstent to the act that unsklled women, that are concentrated n the rst decles o ncome, work less, whereas n the rchest households ncome reles more on sklled men. Ths last act may be explaned by the exstence o a glass celng or emale wages. Table 5. Households labor ncome by decles Sklled Sklled Unsklled Unsklled Publc Women Total women men women men labor (%) Frst decle Second decle Thrd decle Fourth decle Fth decle Sxth decle Seventh decle Eghth decle Nnth decle Tenth decle Source: SAM Model 2 ncludes also a new actvty: lesure. Followng Fontana and Wood (2000), ths actvty s a cton, assumng that t produces usng only labor, pays to households and produces one type o good that s consumed only by households. In Annex 1 we explan how we estmate tme devoted to lesure by households and labor categores. In order to ntroduce ths data nto the SAM, we valuate tme spent n lesure as the opportunty cost o not workng n the market. For dong so, we calculate the average hour wage or each labor category and each household. Ths s mportant because the average 14

17 hour wage depends not only on the qualcaton o the worker but also on other varables, such as the socal network o the household. Model 3 separates lesure actvty n lesure and domestc work. Annex 1 also presents the estmaton o tme spent n domestc work. In the SAM, domestc work s also valuated as the opportunty cost o not workng n the market. In terms o market value, tme spent n market work, lesure and domestc work s shown n table 6. It must be notced that n ths case we are not consderng tme n hours but tme valued at the opportunty cost, and or that reason there are sgncant derences wth table 2 3. When we value tme spent n labor market, lesure and domestc work accordng to the opportunty cost, the share o market work or sklled workers s hgher than the estmatons presented n table 2. The opportunty cost or the same category o worker vares accordng to the type o household (dened by decles o ncome). Sklled workers n hgher ncome households obtan hgher wages and assgn more tme at market work. In contrast, sklled workers n lower ncome household obtan lower wages and assgn more tme n lesure and domestc work. Thereore, or sklled workers, total hours spent n market work are n average valuated at a hgher opportunty cost than hours spent n lesure and domestc work. Despte ths, the man conclusons about the tme dstrbuton by gender reman; women spend more tme workng at home whle men spend more tme at market work. Also, unsklled workers spent more tme n lesure. Table 6. Valued tme dstrbuton or each labor category Sklled women Sklled men Unsklled women Unsklled men Market work Lesure Domestc work Total Source: SAM 3 Besdes, n table 6 tme spent n personal care s not consdered, and or that reason percentages presented n table 2 are much lower. 15

18 4. Scenaros and Results 4.1. Smulaton scenaros The am o ths paper s to assess how trade openness aects welare, relatve prces, specalzaton, trade and labor market n Uruguayan economy usng derent speccatons o a CGE model. Wth that n mnd, we smulate three derent scenaros. The rst one assumes a complete lberalzaton o trade wth the rest o the world, whch mples a null tar level or mports comng rom the rest o the world. In the base year, trade wth MERCOSUR s already lberalzed, and tars to mports rom Argentna and Brazl are already zero. Although we are conscous that ths scenaro s qute extreme and s not plausble to happen n the short and medum term, we thnk that t mght provde nterestng nsghts nto how trade openness aects labor market by gender and also allows us to compare the conclusons wth the results rom other studes. The second and thrd scenaros are backwards experments. They smulate a trade closure, by settng tars at the level o 1994, when trade openness was startng to be mplemented n Uruguay. One o these scenaros smulates the tar structure o 1994, and the other one smulates also the exstence o reerence prces n textles. Reerence prces act as tars, so we smulate the equvalent ad valorem tars assocated wth these prces, taken rom Terra et al (2005). Garments and textles are emale labor ntensve, and or that reason we mght expect derent results on gender parameters when we ntroduce reerence prces n these sectors. These two scenaros are analyzed together n order to compare how reerence prces aected labor market n the 1990s. Table 7 presents the tar structure appled n 1994 and the tar structure at the base year (2000) or comparson purposes. Garments and textles are consdered as export actvtes n the SAM used n ths work. When we ntroduce an equvalent tar to reerence prces, the tar appled to mport rom the rest o the world or export actvtes ncreases to 30.5% whle the one appled to mport actvtes ncreases to 14%. 16

19 Table 7. Ad valorem tars smulated or each sector o actvty Sector o actvty Tar structure n 1994 Tar structure (SAM) at base year Argentna Brazl ROW ROW Agrculture Rce Ceramcs Tannng Export actvtes Forestry Meat processng Husbandry Gas Import actvtes Dary products Wood and paper Non tradable actvtes Other prmary actvtes Chemcals Renery Other servces Results In ths secton we analyze, rst, the mpact o total trade lberalzaton on macroeconomc and labor market varables, and specalzaton patterns. Then we ocus on the scenaros where trade protecton ncreases. a. Total trade lberalzaton Complete trade openness to the rest o the world has the expected postve mpact on macroeconomc varables. Both exports and mports ncrease by more than 10 percent. Meanwhle, real GDP, absorpton and nvestment rse. However, the mpact s hgher n the models wth endogenous labor supply, especally when we consder Model 3, whch also ntroduces domestc work. Snce exports o Uruguay are relatve ntensve n labor, trade lberalzaton leads to an ncrease o wages and labor supply. Then, GDP and consumpton possbltes ncrease more than n a scenaro where labor supply s xed. 17

20 Table 8. Impact o trade openness on macroeconomc varables. Percentage change Endogenous labor Exogenous Endogenous supply and home labor supply labor supply producton Absorpton Household consumpton Investment Real GDP Exports Imports Consumer prce ndex Snce tars appled to mports rom MERCOSUR partners are near to zero, trade lberalzaton aects manly tars appled to the rest o the world (ROW). Then, mports rom ROW show a sgncant ncrease whle mports rom Argentna and Brazl all. Table 8 shows that the ormer ncrease more than 39% and the latter all 22% and 25% respectvely. Uruguayan economy benets rom a sgncant reducton o trade dverson rom MERCOSUR partners. At the same tme exports to all destnatons ncrease, but the rse s hgher or Argentna (almost 15%) and Brazl (around 14%) than or the ROW (less than 12%). Table 9. Impact o trade openness on trade lows Model Trade Flow Argentna Brazl Rest o the world Exogenous labor supply Exports Imports Endogenous labor supply Exports Imports Endogenous labor supply and Exports home producton Imports Table 10 shows relatve ntensty n the use o actors and balance o trade by partners or aggregated sectors 4. As shown, trade patterns wth man commercal partners der substantally. Uruguay has a trade surplus wth Argentna n servces, whch are hghly ntensve n sklled labor, especally emale labor. On the other hand, the country has 4 There are sx aggregated sectors: agrculture and agrondustres, whch comprse prmary actvtes and ood ndustry; mport substtuton manuactures, whch comprse chemcals, paper and ceramcs; exportng manuactures that nclude textles, garments and tannng; tradable servces that nclude servces to enterprses and tourst servces such as transport, hotels and restaurants; non tradable servces, whch are manly health and normal actvtes; and ol and gas. 18