Quota removal, gender-specific export shock, and female labor force participation in China

There is a lack of consensus on how trade liberalization affects female labor force participation (FLFP), primarily due to challenges in identifying exports of female labor-intensive products. In this study, we construct a unique gender-specific export shock by examining the removal of the Multi-Fiber Arrangement (MFA) trade quotas in 2005, which targeted the female labor-intensive textiles and clothing (T&C) industry. Using a difference-in-differences (DID) approach, we find that MFA quota removal significantly increases FLFP in China, which is attributed to the heightened demand for female labor in the T&C industry and related services. Increased demand not only boosts women incomes but also significantly reduces fertility rates. Furthermore, it disproportionately benefits four specific female groups: well-educated women, young women, unmarried women, and those without young children.