Trade Liberalization, Female Labor Force Participation and Economic Growth

T h is r es ear ch ar gu es th at th e inter action b etween inter n ation al tr ad e an d female labor force participation has played a significant role in the timing of th e d em ogr ap h ic tr an s ition an d , th er ef or e, h as d eter m in ed d iffer en ces in economic performance across countries. The theory suggests that interna- tional trade has affected the evolution of economies asymmetrically and that initial differences in capital labor ratios across countries were the source of this asymmetry. The main concern of our study is to show how differences in per household capital stocks, via international specialization, affect household choice of fertility and female labor force participation and how these decisions, in turn, feed back and affect the accumulation of capital. Surprisingly, and unlike the existing literature on international trade our model predicts a non- monotonic relation between the specialization pattern and the stock of capital of the trade partner.