How trade shapes women’s jobs in the services sector: New insights

Today’s global economy is more interconnected than ever, and trade — along with global value chains (GVCs) — plays a major role in shaping job opportunities. Previous research has shown that manufacturing firms in developing countries engaged in international trade tend to hire more women, boosting female participation in the workforce. But as the services sector grows rapidly in developing countries, we need similar insights for this part of the economy. A new study sheds light on how international activity shapes women’s employment in services, offering important guidance for policymakers.
 

The Problem: Services Sector Often Overlooked

In the past, most research has zeroed in on manufacturing, where trade has been shown to boost jobs for women. But the services sector — which covers everything from retail trade and hospitality to IT and business services — hasn’t gotten the same level of focus, despite its rapid growth in many developing countries. Services jobs often require different skills, offer new opportunities and follow different patterns than manufacturing, so it’s crucial to understand how these changes affect women’s employment. This study helps fill that gap by analyzing data from more than 33,000 services firms across 104 low- and middle-income countries, collected through the World Bank’s Enterprise Surveys. By looking closely at whether international service firms (those that export or are part of GVCs) employ more women than local firms, the research provides novel insights.
 

Methodology: A Closer Look at Firms

The study compares firms involved in international activities — such as exporting, importing, or participating in GVCs — with those that aren’t. It examines the share of female employees, and the share of wages paid to women, while also considering factors like firm size, use of machinery, productivity, sectors, and locations, and whether the firm has female owners or managers. To ensure robust findings, the study cross-checks its results with sector-level data from the OECD. This additional analysis confirms that, in services, firms engaged in export activities employ a lower share of women compared to non-exporting firms.
 

Key Insights: Services Sector Shows Different Patterns

The research uncovers important differences between manufacturing and services. In the services sector, firms that export or participate in GVCs tend to have a lower female employment share. This is the opposite of what’s typically seen in manufacturing, where international trade boosts women’s employment. In Ethiopia, for example, we found that women represent 65 percent of workers for exporting firms in manufacturing but only 11 percent in services.

Notes: The graph shows weighted averages by firm type, using the number of permanent workers as weights. Exporters are firms with an export share (direct or indirect) of at least 10 percent of total sales. Importers are firms with an imported input share of at least 10 percent of total inputs. GVC participants are firms that are classified as both exporters and importers.
Source: Aguilar Luna and Winkler (2025)

A possible explanation for this negative relationship in services is sectoral segregation — meaning that women are more likely to work in less export- and skill-intensive areas like retail, while men are more likely to work in globalized, skill-intensive or specialized sectors such as IT (where we found the female labor share to be 2.3 percentage points lower for exporters). Importing and foreign ownership do not appear to significantly affect female employment shares in services, but when accounting for female leadership and ownership, importers actually hire fewer women. International services firms often require skills or flexibilities that women with caregiving responsibilities may not have, such as working odd hours or traveling at short notice, which limits their job options and contributes to the gap. Overall, while internationalization in manufacturing helps women participate more in the workforce, services firms often show the opposite trend, driven by sectoral and skill divides. On a positive note, services firms led or owned by women tend to employ more women.

Policy Implications for Developing Countries

These findings offer valuable lessons for policymakers in developing countries who want to make sure the growing services trade benefits women. Here are some key recommendations:

• Targeted Skill Development: Invest in education and training programs specifically for women in skill-intensive, export-oriented service sectors like IT and advanced business services. This can help women access better-paying, trade-related jobs.
• Promoting Female Leadership: Support female entrepreneurship and leadership in services firms. Policies that improve access to finance, mentorship, and business networks can lead to more women being hired.
• Addressing Sectoral Segregation: Tackle the root causes of sectoral segregation by promoting stronger representation of women in hiring, challenging stereotypes in education and career choices, supporting women’s ability to work outside the home, and providing incentives for firms in male-dominated sectors to hire and retain women.
• Leveraging Digitalization: The gap in female labor share among services exporters narrowed after Covid-19, possibly due to increased digitalization. Policies that encourage digital literacy and improve women’s access to technology can boost their participation in the growing services sector.
• Rethinking Policies for Services Trade: Unlike manufacturing, trade in services requires a tailored approach. Policymakers should actively promote female inclusion — such as supporting women-owned businesses and prohibiting discrimination — instead of assuming trade will automatically benefit women.
• Data-Driven Interventions: Detailed, sex-specific data at the firm and sector levels is essential. Continued investment in collecting this data will help policymakers understand changing job markets and design effective interventions.

While trade has helped increase female employment in manufacturing, the services sector presents a more complex picture. For policy makers in developing countries, understanding these nuances is key to ensuring that trade leads to fair and inclusive economic growth.

Source : World Bank