This study analyzes the impact on male and female wages
of tariff reform and the reduction of regulatory barriers
faced by domestic and foreign firms operating in business
services. The study applies the model to Tanzania and
develops a data set that distinguishes labor and wages by
gender for 52 sectors and four skill categories. The model
is the first to incorporate modern trade theory to assess
the gender implications of trade reform. Given that the
Dixit-Stiglitz framework results in productivity gains
from additional varieties of services, the analysis finds that
real wages increase across all worker categories. However,
the increase in wages is higher for males than for females,
because business services use males more intensively than
females. The most skilled (female and male) workers, who
are also the most intensively used in the business services
sectors, benefit more from the real increases in wages. The
model illustrates that as the development process continues
and developing countries become more business
service oriented, these sectors demand more educated
workers and their wages will increase relative to those of
unskilled workers. The policy conclusion from this model
is that it is crucial to invest in the education of females
so their human capital increases and their skills are more
marketable in business services and other more technologically
modern occupations. Otherwise, the wage gap
between males and females would likely widen further