Garima Sharma is a Postdoctoral Research Associate in the Industrial Relations Section at Princeton University. Garima will join Northwestern University as an Assistant Professor of Economics in 2024. Research focuses on development and labor economics.

Abstract 

This paper investigates the role of monopsony power in explaining the gender wage gap in Brazil. I use firm-specific demand shocks induced by the end of a textile and clothing trade agreement (the Multifiber Arrangement) to show that women are substantially less likely than men to leave their employer following a wage cut. The resulting gender difference in monopsony power would generate an 18pp gender wage gap among equally productive workers, explaining over half the observed gender wage gap. I next use a model to show that this higher monopsony power over women has two intuitive sources: (i) women prefer their specific employer more than men (10pp), and (ii) women have fewer good employers than men, with good jobs for women highly concentrated in the textile sector (8pp). Surprisingly, this concentration itself largely reflects the amenities/disamenities present in different sectors rather than gender-based comparative advantage. My findings demonstrate that although the textile industry provides women desirable jobs, this desirability confers its employers with higher monopsony power. Desirable jobs for men are not similarly concentrated