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11198 International Activity and Female New Evidence for Services Firmsin Developing Countries Luis Aguilar LunaDeborah Winkler Policy Research Working Paper11198 Abstract Using a cross-section of more than 33,000 services firmsin 104 low- and middle-income countries from the WorldBank’s Enterprise Surveys, this paper examines whetherthe female labor share premium of international firmsrelative to non-international firms in manufacturing alsoholds for services firms. Unlike the manufacturing sector,the paper finds a negative relationship between exporting COVID-19, and the gap for global value chain participantsis no longer significant after COVID-19. Controlling forsectoral relative wages between men and women does notchange the findings in a smaller subsample of economies.Controlling for female top management and ownershipreveals a female labor share gap for exporters, global valuechain participants, and importers. Using an alternative esti- This paper is a product of the Economic Policy Global Department. It is part of a larger effort by the World Bank toprovide open access to its research and make a contribution to development policy discussions around the world. PolicyResearch Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about developmentissues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry thenames of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely thoseof the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and New Evidence for Services Firms in Developing Countries Keywords:Services firms, trade, global value chains, women, female labor share, labor JEL codes:F1, F2, F6 1.Motivation Several studies have linked trade participation in developing economies to higher femaleemployment and wages (World Bank-World Trade Organization 2020). Empirical evidence indicatesa positive correlation between export growth in developing countries during the 1960s and mid-1980s and increased female labor force participation (e.g., Wood 1991). The Heckscher-Ohlin model Focusing on manufacturing firms across a wide sample of low- and middle-income countries(LMICs), Shepherd (2018), Rocha and Winkler (2019), and Rocha, Shepherd and Winkler (2020)assess whether firms that engage in trade and foreign direct investment (FDI) have a higherproportion of female employees compared to non-international firms. Their findings confirm afemale labor share premium for exporters, importers, firms participating in global value chains Cross-country evidence also suggests that even across developing economies the relationshipbetween trade and female labor force participation varies substantially (Heath et al. 2024, Wacker etal. 2017, Tejani and Milberg 2016, Aguayo-Tellez 2012), which can depend on several factors.Besidessectorreallocation,other channels through which trade participation affects female labor or against women, depending on several factors including the relative magnitude of channels in thecountry, the country’s comparative advantage, and sector and workforce characteristics. Studies also show that trade liberalization can reduce the female wage gap and raise female labordemand by reducing discrimination, as seen in Uruguay (Ben Yahmed 2017) and Colombia(Ederington et al. 2009). Oostendorp (2009) found that greater economic development and trade areassociated with lower female wage discrimination across a large sample of countries. Junh et al.(2013, 2014) demonstrated that firms entering export markets due to NAFTA, and those which also In this paper, we focus on the relationship between firms’ international status and the femalelabor share for services firms. Only few studies have emphasized the role of trade in services forfemale labor participation. Wacker et al. (2017) find in a panel of 80 developing countries over theperiod 1980-2005 that the effect of services trade on the female labor force participation rate is This paper contributes to the research on trade and labor in several ways: (1) We adapt the costshare functions of Feenstra and Hanson (1996) to examine trade’s impact on female versus maleworkers, rather than high- versus low-skill workers. (2) We use a comprehensive, harmonized micro-level dataset covering numerous developing and emerging economies, unlike many studies that rely (5) We use an alternative dataset which confirms the broad findings of a female labor share gap in Unlike the manufacturing sector, our study finds a negative relationship between exporting andGVC participation and the female labor share for services firms, while no relationship is found f