Girl Power .

Female Labor Force Participation and

Industrialization

Gülfem Demiray

ECON 374

Fall 2010

I. Introduction

Twenty years ago, Qiaotou, Yongjia, was merely a village in China. Producing two-thirds of

the world’s buttons, it is today dubbed as the “button capital of the world.”1 Such potential

for explosive growth is a distinct aspect of the manufacturing industries, especially of its

textile and apparel sectors.2 Accounting for nearly half of the manufacturing industry in

mid-eighteenth-century Britain, increasingly mechanized textile and clothing sectors were

the rising stars of British economy at the dawn of the Industrial Revolution (Harley, 1993, p.

166). At the same time, the cotton industry, which supplemented the textile and clothing

sectors, was attributed with the greatest increase in industrial productivity (Berg, 1993, p.

27). Such historical facts raise the question of whether the emergence of a mechanized

textile industry is a prerequisite for the industrialization process and the inauguration of

long-run sustained economic growth.

Prerequisites for a transition to factory textile production comprise advanced

technologies for ginning and spinning cotton, large supplies of raw cotton, and the capital

requirements –capital, inexpensive labor, and a large enough market to sell the finished

product–, along with practical and cost-effective transportation that connect the cotton

supply and the market. With Arkwright’s spinning machinery, modest fixed-cost

requirements that could even be funded by the profits accumulated at the artisan level, a

large workforce that was willing to work for little compensation due to the rapidly growing

population, and control of water-borne trade that efficiently connected supplies of raw

cotton and product markets, England was the first to perfectly meet all these conditions. So,

1 (UNIDO, 2009).

2 Ibid.

the first modern textile industry was developed in England at the turn of the nineteenth

century (Mokyr, 1999; Pollard, 1981).

However, there was one other region that also met all the prerequisites for modern

textile production, but still did not experience the emergence and growth of textile factories:

China. The water-driven textile machinery developed in the 14th century provided the

technological breakthrough needed (Elvin, 1973). The markets for cotton cloth –comprising

tens of millions of people early as the 16th century– were connected with cotton-growing

regions by China's internal waterways. And there was sufficiently enough capital in China,

as it was able to build successful factory complexes for production of fine ceramics. Other

countries in Europe followed England’s lead in factory textile production as the related

technical technology and knowledge spread in the nineteenth century (Allen, 2009). It is

intriguing why China failed to develop the factory textile production seen in Europe, even

after that technology was diffused and well-known in Asia.3

This essay argues that Britain industrialized before China, because it was able to

fabricate a modern textile manufacturing industry, whereas China could not do that due to

cultural differences between the two regions, regarding the role of women in the society.

Section II presents a survey of feminist economic theory on growth and introduces

Seguino’s Gendered Growth Theory model (2000). Section III elaborates on female workers

in industrial Britain and how they contributed to industrial growth. The following section

focuses on the contemporary Chinese counterparts of the British female workers who fueled

industrialization.

3 China could not adopt the technology for a while and fell behind Japan for half a century.

II. Female Labor Force and Asian Growth: A Brief Survey of Feminist

Economic Literature

In socio-economic theory, women at home are non-productive, so they embody the

antithesis of women at work (Tilly and Scott, 1978, p.91). From a macroeconomic point of

view, a surge in female labor contributes to economic growth initially by increasing the

labor supply. As the proportion of a country’s trained and skilled population increases along

with the increase in the labor supply, the probability for technological advancement

increases, as well. The inclusion of women in the labor force also directly augments the

GDP by establishing new business activities and by impelling the accurate accounting of

such activities that would otherwise be unrecorded and thus protected from taxation and

regulation (Dolton, Marcenaro-Guttierez, and Skalli, 2008).4

On the microeconomic level, the expansion of women’s labor force is accompanied

by enhanced spending power and financial security within households. Thus, women’s wage

can act as an agent in reducing poverty; for example, if married women did not work and

earn wages in Latin America, poverty in two-parent households would have been 40%,

instead of the actual 26% (Pagés and Piras, 2010). By increasing their economic

contribution to the household, women also contribute to growth in the long run. Because, as

their economic resources increase, women invest more in their children compared to their

husbands (Thomas, 1990). When their income increases, if women choose to spend more on

their children’s health, education, and well-being, as the theory predicts, then, the future

generations will have a higher stock of human capital, and therefore, higher rates of growth.

4 In other words, the official inclusion of women in the labor force corrects distortion in the tax system and

indirectly makes it easier for the government to manage its finances.

There isn’t much theoretical and empirical data in the literature specifically on

women workers’ impact on the rise of Industrial Revolution in Britain. But, Goldin and

Sokoloff (1984) found empirical evidence that female labor was a very important factor in

the industrialization of the American Northeast. In fact, the existence of women in the

region as potential manufacturing labor force was the reason why American industrial

development was initially concentrated in the Northeast. There is also a growing body of

feminist literature suggesting that gendered labor force in the textile and apparel industries

has played a major role in industrial miracles and rapid growth of the Asian economies

through trade and export-led growth (Seguino, 2000, 1997; Cheng and Hsiung, 1998;

Horton, 1996).

The positive relationship between trade and economic growth is also predicted by

the classical model of international trade and gains-from-trade theorem, which assumes that

countries engage in trade because trade makes them better off due to the differences

between their relative productivities. Trade also stimulates productivity, since exports have

triggering influence across the economy as a whole, sometimes through technological

spillovers and other externalities; large exports are predicted to increase the stock of

knowledge and human capital in the economy (Todaro and Smith, 2009).

Seguino’s Gendered Growth Theory (2000)

Seguino (2000) proposes a simple model based on the macro effects of gender

discrimination on wage payments and job access. The theory asserts that women’s wages

can be artificially lowered to generate lower export costs, through the Asian practice of

segregating women into labor-intensive manufacturing export industries; the lower labor

costs make exports more competitive by substituting for currency devaluation. The Seguino

Gendered Gowth model has two assumptions: 1) the price elasticity of exports is high for

the major exports of developing Asian economies, 2) male wages accurately reflect labor

productivity, so that they can serve as a benchmark.

The following export function demonstrates the relationship between export demand

and domestic price of exports:

EX = Z(ePX* /PX) Z > 0, 0 < <

EX ------- export demand

Z ------- constant

e ------- nominal exchange rate

PX* ------- foreign currency price of competing products from other countries

PX ------- price of exports in domestic currency

------- price elasticity of exports

(ePX* /PX) ------- real exchange rate for exports

This export function implies that as PX falls, EX rises; in other words, as the price of exports

in domestic currency falls, export demand rises. Assuming mark-up pricing, the function for

price of exports in domestic currency, PX, illustrates the relationship between female wages

and domestic price of exports:

PX = (1+μ)(wfaX + ePn*nX), 0 < < 1

μ ------- flexible mark-up over unit costs

wf ------- female wage

aX ------- average labor coefficient in the export sector

Pn* ------- foreign currency price of imported intermediates

nX ------- import coefficient in the export sector

As can be seen from the formula, a decline in female wages, wf, results in a decrease in the

domestic price of exports, PX . Linking the two functions, a decline in female wages, wf, first

leads to a decrease in the domestic price of exports, PX , and then results in an increase in

export demand, EX .

Low female wages in Asia can also stimulate productivity growth through the

demand-side stimulus it exerts on exports. The developing Asian economies are technology

borrowers, as they have industrialized later than the developed countries that already

devised useful technologies. And the increase in export demand stimulated by the lowering

of female wages provides the foreign exchange needed to purchase such technologies that

can raise productivity and stimulate growth.

Thus, the model predicts a positive correlation between the degree of discrimination

against women and economic growth. Seguino (2000) presents empirical data that supports

the predictions of the Gendered Growth Theory. Showing the average annual rate of GDP

growth for 1975-95 plotted against the log difference of male and female wages, which

serves as a measure of gender wage inequality, Graph 1 illustrates the positive relationship

between growth and gender discrimination against women, as greater wage gaps are

accompanied by faster rates of growth. Graph 2 similarly shows the positive relationship

between investment as a share of GDP and gender wage inequality.

III. Women and the Industrial Revolution

Female labor in Early Modern England

The textile industry played the most significant role in women’s entry into the labor force

during the process of industrialization (Cox and Nye, 1989, p. 915). Young and single

women in Britain in the eighteenth and nineteenth centuries were very much involved in the

urban trades, dominating domestic service occupations and many sectors of the textile

industry. Married women could work in retail trading and in unskilled occupations, such as

laundressing, but there were far fewer married women in the workforce, than the young and

single women (Honeyman and Goodman, 1991, p. 16).

Despite the small proportions of men, these young women comprised the bulk of the

unskilled workforce in the textile factories. Clothing firms would also employ women to

work at home, in addition to those who worked in factories or workshops (Berg, 1993;

Honeyman and Goodman, 1991; Scott and Tilly, 1978). The cotton industry in the

eighteenth and nineteenth centuries employed higher proportions of women and children, as

well. Lace-making and stocking knitting industries were also among the industries that

employed more women than men were (Berg, 1993).5

Women were such key parts of these industries that they would even be the targets

of innovations in manufacturing methods and machines would be invented in order to

accommodate the female workforce. For example, the spinning jenny was originally

designed to be used by an adolescent girl, as the horizontal wheel made it too uncomfortable

for an adult worker to use (Berg, 1993, p. 34).

Later in the 19th century, the emergence of the department stores created new

substantial demand for female labor in the service sector, as such stores provided

employment on a large scale.6 The typewriter at the end of the 19

th century also provided

new working opportunities for women (Honeyman and Goodman, 1991, p. 15).

5 Lacemaking was exclusively a female sector that “developed on the feminization of poverty” and “promoted

the independence of women as wage earners” (Berg, 1993, p. 29). 6 For example, the Bon Marche in Paris employed 2,500 sales assistants in the 188os and the Louvre hired

3,500-4,000 in I900 (Honeyman and Goodman, 1991, p. 15).

Gender Discriminations and Wage Disparities

There was a very large gap between men and women’s earnings in the eighteenth and

nineteenth centuries (See Table 1). Women had lower wages than men in most branches of

manufacture. Moreover, women’s wages were sometimes even lower than the lowest male

wages, which belonged to male agricultural workers (Berg, 1993, p. 31).

Neoclassical economic theory would attribute this wage gap to differences in

marginal productivity. However, wages in early industrial England were determined by

custom, not productivity (Burnette, 1997, p. 259). So women would be paid lower wages

whether they were less skilled and efficient than their male colleagues, or not. Honeyman

and Goodman (1991, pp. 608-9) view the low customary female wages as a reflection of the

period of gender conflict that occurred in the early nineteenth century, as men felt threatened

for their position of economic strength and patriarchal power.7 Another reason why women

were low paid because they were viewed as temporary workers who would leave the job as

soon as they got married (Honeyman and Goodman,1991, p. 615).

Due to the significant disparities in wages, the majority of business owners preferred

women employees because of their profitability. Business owners could not attempt to make

profits by cutting their capital costs and using cheaper fabrics, because, the fabric was the

most important element in a woman's dress and the target clientele was exclusively

interested in high quality garments and trimmings (Fine and Leopold, 1990, p. 173).

Lowering wages was the only left option; however, male labor unions were too cautious and

proactive to let their wages to be lowered. Therefore, the female workforce that was willing

7 Honeyman and Goodman (1991) point out that there were two particularly intense periods of gender conflict

in Europe, and the other period had lasted from the late fifteenth to the end of the sixteenth century.

to work for low wages provided the business owners with an incredible and unique

opportunity to increase their profits (Honeyman and Goodman, 1991, sources).

The disparity in wages persisted, as the increasing subdivision of tasks within

factory production increased the demand for labor and most openings in unskilled tasks

were filled by the large supply of cheap female labor. New businesses would usually search

locations where there was female unemployment, in order to acquire cheap labor at an even

greater discount (Honeyman and Goodman, 1991, p.18).

The low cost of female labor gave the business owners in textile and clothing

industries extraordinary comparative advantage in trade. Supporting the predictions of

export-led growth theory and Seguino’s Gendered Growth Theory (2009), the businesses

made great amounts of profits, as there was a large demand for their manufactured goods in

international markets due to the low domestic prices. Although Britain used to import cotton

in the 18th century, primarily from India, cotton production had grown by over 1000% by

1841 and thus England was able to export two-thirds of its cotton throughout the world

(Harley, 1993, p. 185). The low female wages were beneficial for the business owners also

in the long-term, because the extra profits let the capitalists invest in innovations and new

technologies that increased productivity (Goldin and Sokoloff, 1984).8

8 The indirect influence of female labor force on technology and innovation is still consistent with the second

part of Seguino’s theory. It is just a slight alteration of the model, as the industrializing Britain would invent

the new technologies, unlike contemporary Asian countries that borrow technologies from abroad.

More on the influence of female labor on industrial growth

The increase in net exports, stemming from the gender disparity in wages, is widely credited

for having a positive influence on industrialization in England. Female labor also had other

positive effects on industrial growth, as the labor force in the dynamic and highly productive

textile industries that generated growth and led the way to industrialization was

predominantly comprised of women workers (Berg, 1993, p. 26).

Women’s work in the period was characteristically low-waged and exploitative, as

discussed above. However, even such little amount of extra income could mean a lot for

poor household budgets and could lift families above destitution (Horrell and Humphries,

1995).9 As a matter of fact, most women entered the labor force, as households needed

increasingly more poor relief because of the depressing wages that resulted from the

explosive population growth between 1770-1830 (Snell, 1985).

Besides, increasing employment of women, and children, expanded contributions to

family income and increased consumption in households that were already above the

subsistence level. According to McKendrick (1974), this increase in consumption led to the

expansion of domestic demand.10

Horrell (1996) disagrees, and asserts that domestic

consumption was highly insignificant compared to the size of exports.

9 There were also limited possibilities of gaining an independent living for women, where women’s wages

were higher (Berg, 1993, p. 40). 10

McKendrick (1974) explains that the increased income of women and children resulted in greater demand

for cheap household and clothing items, not only because the increased family income provided a surplus

above necessities with which women could buy manufactured goods, but also because this increased income

and control gave women the desire to mirror higher social groups by buying female-oriented consumer goods.

IV. The Role of Cultural Differences

Both early industrial England and post-World War II China exhibit patterns in female labor

and economic growth that support the predictions of Seguino’s model (2009). The main

question that still remains is why England industrialized before China. The cultural

differences regarding the place of women in the society can account for part of this

intriguing mystery that has intrigued economists and historians for decades.

Demographically, Western Europe was marked by a pattern of nuclear families, late

marriages, and a great number of women who remained celibate, whereas in China women

married young and female marriage was universal (Alter and Clark, 2010; Lee & Fang

1999). Unlike their contemporary Chinese counterparts, Western European women widely

worked outside their households for wages; they worked as part of the labor force starting in

their early teens until they got married in their mid-twenties. Chinese women did not have

such a period for work in their lives, as almost all girls were married in their early teens.

The other part of the problem stemmed from the division of labor that restricted

female labor exclusively within domestic households. Young Chinese women were never

allowed to work outside the family household under the supervision of non-family members

(Hershatter, 2007), whereas female work contribution was necessary in Europe and

daughters would be frequently sent out of their households to work as agricultural laborers

or domestic servants, as soon as they were physically capable. As a result, Chinese women

remained immensely involved in household production. During the Ming Dynasty, when

cotton cultivation and spinning were first seen in China, women would do spinning and

weaving at home, while men worked outside in the fields. This pattern, in which women

were restricted to domestic tasks inside their houses, and men were placed outside, was also

mirrored in silk productions, and across all ranks of the peasant and working classes

(Walker, 1993; Mann, 1990).

Breaking this physically and functionally segregated pattern was against the

traditions and it was also considered as morally wrong, because the Chinese believed that it

spoiled the purity and integrity of the family (Hershatter, 2007). Moreover, women who

worked outside their home experienced kidnapping, trafficking, sexual violation, and

potential disgrace. As a result, women couldn’t work at textile factories and even in the

early twentieth century, there still wasn’t a market for female labor despite the opportunities

provided by industrialization, expanding markets, and foreign entrepreneurs (Huang, 1990,

p. 8). Mann's (1990, p. 32) study of the Ningbo village revealed that even the poorest

families considered sending their daughters to work in the factories as a "last resort."

Besides, According to Zhao (1975), domestic production and factory production can

coexist only if there is a scarcity of labor. Otherwise, if there is surplus labor, household

production is able to drive back factories that manufacture the same product. So, factory

production of cotton thread and cloth did not develop in China in the eighteenth and

nineteenth centuries, because with all the women who were tied to their households, the

peasant household as a labor-unit was cost efficient and could spare the cost of labor for

internal production (Huang, 1990; Chao, 1975).

The Chinese women didn’t start working outside their households before the early

years of the People’s Republic, when the government regarded female labor as an integral

part of their state development strategy. In the late 1950s, women were motivated to join in

the national labor force and paid employment became a standard feature of urban women's

lives during the Mao years (1949-76).

Conclusion

Female labor force is an essential part of Seguino’s Gendered Growth Theory (2000) and

the model collapses without it. If women don't work, then there are no women's wages that

can be lowered to generate lower export costs. As a result, there is no substantial increase in

exports and investments.

There is no doubt that other factors were involved in why England industrialized

before China. However, women’s labor played an important role in England’s

industrialization and so China’s lack of a female labor force during that time suggests an

important reason as to why it didn’t industrialize at the same time as England. Besides, the

fact that industrialization and economic growth rocketed in the twentieth century, when

Chinese women participated in the labor force, supports the hypothesis that female labor

force is a key part of the industrialization process.

Figure 1. Growth Rate of GDP, 1975-95

and Gender Wage Gap

Figure 2. Investment and the Gender

Wage Gap, 1975-95

Source: Stephanie Seguino (2009). “Accounting for Asian economic growth: Adding

gender to the equation,” Feminist Economics 6(3): 27-58.

Source: Joyce Burnette (1997). “An Investigation of the Female-Male Wage Gap During the Industrial

Revolution in Britain,” Economic History Review 50(2): 257-81.

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Honoré Daumier (1808-1879)

La Blanchisseuse [The Laundress], c. 1863

Oil on wood, H. 49; W. 33,5 cm

Musée d'Orsay