Effects of Free Trade on Women and Immigrants: CAFTA and the Rural Dominican Republic MATEUSZ FILIPSKI and J. EDWARD TAYLOR University of California, Davis, USA and SIWA MSANGI * International Food Policy Research Institute, Washington, DC, USA Summary. — We construct a disaggregated rural economywide model with a focus on gender and immigration as well as on the allo- cation of time to wage work, household production activities, and housework (reproduction). We use this model to simulate the impacts of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) on rural incomes and welfare in the Dominican Republic. We find that elimination of agricultural import tariffs hurts both agricultural and non-agricultural households, via adverse factor-market effects, but impacts vary substantially by workers’ gender and country of origin. Females and Haitian immigrants tend to fare better than Dominican males, and there are ramifications for both market and non-market activities. Ó 2011 Elsevier Ltd. All rights reserved. Key words — gender, immigration, general equilibrium models, Dominican Republic, Haiti, Central America and the Caribbean 1. MOTIVATION AND LITERATURE REVIEW Who are the winners and losers from free trade? It is gener- ally believed that trade liberalization has positive impacts for most, although its effects may differ across social classes, industries, and regions within countries. Identifying losers is particularly relevant in rural areas of less developed countries, which are home to 75% of the world’s poor. The sign and size of impacts are likely to be determined by idiosyncratic factors such as preferences, income sources, and differences in employment opportunities across households and worker groups. There are fundamental differences between men’s and women’s access to labor markets, production activities, and intra-household wealth in rural economies (Anker, 1998). Reliance on immigrants for low-skilled labor in agricultural production is a frequent phenomenon throughout the world (Taylor, 2010), and most international migration is toward developing countries (Massey et al., 1998). In light of this, the restructuring of rural economies around new trade regimes is unlikely to be neutral with regard to gender or immigration status. Despite growing awareness that the impacts of policy outcomes vary among demographic groups, neither gender nor immigration have been the focus of much trade policy modeling. The present research brings gender and immigration status squarely into a model aimed at understanding the impacts of agricultural trade and policy shocks in a rural economy. Our Gender and Immigration Model (GIMO) draws heavily on the Computable General Equilibrium (CGE) tradition, with the important distinction that it is constructed for a rural rather than a national or multi-nation economy. The key ques- tion we address is whether workers’ gender and immigration status shape policy impacts in the rural Dominican Republic, and if so, how. We explicitly model the imperfect allocation of labor among paid and unpaid work, agricultural and non-agricultural work, housework, and leisure. Our model highlights ways in which workers may be affected differently depending on their gender and national origin as well as disparities in welfare impacts among female- and male-headed Dominican and Haitian immigrant households. (a) Modeling the impacts of agricultural trade and policy reforms For developing countries entering into new trade regimes, reforms frequently entail the elimination of import tariffs on agricultural products (Taylor, Yunez-Naude, & Jesurun- Clements, 2010). Overwhelmingly, the view of researchers and policy makers alike has been that urban residents win but rural populations lose from food tariff removal. The urban gain re- sults from lower consumption costs, while the rural loss is a consequence of increased competition with imported agricul- tural and livestock goods, which depresses both profits and wages in a sector in which less developed countries presumably have a comparative advantage. Aggregate empirical studies offer mixed findings on the wel- fare effects of trade reforms. Tangermann (2005), using the Global Trade Analysis Project (GTAP) platform, concludes that full agricultural liberalization by high-income countries would enhance the nonagricultural terms of trade for developing countries, thus yielding income gains. However, Anderson and * The authors would like to express their gratitude to the Inter-American Development Bank and the Canadian International Development Agency for making this work possible; to Antonio Yunes-Naude, Jesu ´s De los Santos, Jose ´ Rafael Paulino, Ernesto Sandoval, and the students of the Pontificia Universidad Cato ´ lica Madre y Maestra for their help gathering data; and to three anonymous referees for insightful comments. The usual caveats apply. Taylor is a member of the Giannini Foundation of Agric- ultural Economics. Final revision accepted: March 1, 2011. World Development Vol. 39, No. 10, pp. 1862–1877, 2011 Ó 2011 Elsevier Ltd. All rights reserved 0305-750X/$ - see front matter www.elsevier.com/locate/worlddev doi:10.1016/j.worlddev.2011.04.010 1862