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Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

IZA Institute of Labor Economics

2017

Indonesia

Report/Paper

Influencing Gender Norms Workplace Gender Equality

Gender diversity Gender equality Workplace Gender Equality Women in the workplace Influencing gender norms Globalization Trade liberalization

Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia

The Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia report from the IZA Institute of Labor Economics looks into the gender-specific effects of trade liberalisation on work participation and hours of work, as well as primary participation in domestic duties in Indonesia.

Despite reductions in gender gaps in labour market outcomes over the past decades, large gaps remain, especially in middle-income countries. Globally, according to the World Bank World Development Indicators, 77 per cent of men aged 15 and older participated in the labour force in 2014, compared to 50 per cent of women. In emerging economies, the gender gap in participation rates ranged from 14 percentage points in China to more than 50 percentage points in India.

Women’s ability to participate in the labour force depends on many social and economic constraints. Economic growth and structural change can help remove certain barriers, but little is known about the conditions under which they promote female employment opportunities. This report assesses whether trade liberalisation in the 1990s induced gender specific labour market effects in Indonesia, where female labour force participation has been remarkably stagnant around 50 per cent over the last 25 years.

Highlights

  • Female work participation increased in relative terms in regions that were more exposed to input tariff reductions, whereas the effects of output tariff changes were much less pronounced.
  • When looking at the potential channels for these effects in Indonesia, the structure of initial protection was considerably more female-biased than skill-biased and hence reductions in input tariffs have especially benefited sectors with a larger initial concentration of female workers. This has led to a relative expansion of more female intensive sectors as well as to a decrease in gender segregation of occupation, especially among the low skilled.
  • Labour markets are a key channel through which trade liberalisation affects marriage decisions. Delayed marriage among both sexes is related to input tariff liberalisation, especially in the younger cohorts, as the improved labour opportunities for women reduce the returns to marriage.

Contents

  • Abstract
  • Introduction
  • Context
    • 1 Trade liberalisation in Indonesia in the 1990s
    • 2 Female labour force participation in Indonesia
  • Data and empirical strategy
    • 1 Data
    • 2 Labour market outcomes and marriage rates
    • 3 Measuring trade liberalisation
    • 4 Empirical specification
  • Results
    • 1 Trade liberalisation and labour market outcomes
    • 2 Channels
    • 3 Effects on the marriage markets
  • Conclusions
  • References
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