Co-author(s): Alberto Chong

Abstract: We study the effect of trade liberalization on domestic violence in Peru. We exploit the pre-2007-reform industrial composition of male and female employment by sector in par with tariff changes to compute two measures: male and female exposure to tariff cuts. We find that, between 2004 and 2011, physical violence increased in 20 percentage points in districts that experienced an average change in male exposure, relatively to other districts. This impact was driven by the uneducated women (i.e. those with a low level of bargaining power). However, violence also increased among the educated women, but to a lesser extent. We then show that the labor market is the main link between trade liberalization and domestic violence: according to previous theoretical and empirical evidence, decreasing the wage and employment gender gap can reduce violence against women. Nonetheless, this effect is conditional on the level of bargaining power a woman has: when she has a high level of bargaining power (e.g. more education), closing these gaps may reduce violence, whereas when she has a low level of bargaining power (e.g. less education), it may increase violence. Moreover, negative (positive) income shocks generated by labor markets developments may increase (decrease) stress levels within households, and thereby, violence. We find suggestive empirical evidence that supports these predictions.