Between Sticky Floors and Glass Ceilings: Trade Liberalization and Wage Inequality by Gender and Race in Brazil

Abstract

We investigate how trade liberalization affects gender and racial pay inequalities in the short run. Guided by an intersectional perspective, and exploiting Brazil’s trade liberalization process (1988–95) as a natural experiment, we estimate overlapping effects across gender, race, and wage levels. On average, liberalization increased wages of nonwhite women relative to men and white women. However, this average effect masks substantial heterogeneity. When we decompose pay gaps along the wage distribution, we find that liberalization increased racial and gender inequality at low wages, which exacerbated preexisting “sticky floors” for nonwhite women. In contrast, at the top of the distribution, liberalization reduced racial wage gaps, which mitigated existing “glass ceilings” by race.