Skip to main content

Advertisement

SpringerLink
Log in

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

  • Research Article
  • Published:
IMF Economic Review Aims and scope Submit manuscript

Abstract

We analyze the gender-specific effects of trade liberalization on participation in market work, domestic duties, and marriage rates in Indonesia. We show that female work participation increased and participation in domestic duties declined in regions that were more exposed to input tariff reductions. The effects of output tariff reductions were much less pronounced, and we find little impacts on men. Among the potential channels, we find that reductions in input tariffs led to a relative expansion of more female-intensive sectors as well as a decrease in sectoral gender segregation, especially among the low skilled. Liberalization also led to delayed marriage among both sexes and reduced fertility among less educated women.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: Shapefile Indonesia (2014), Data Sources: UNCTAD-TRAINS (2009), Population Census (1990), Podes (1993), and authors’ calculations

Fig. 2

Source: Shapefile Indonesia (2014), Data Sources: UNCTAD-TRAINS (2009), Population Census (1990), Podes (1993), Input–output Table (1990), and authors’ calculations

Fig. 3

Data sources: UNCTAD-TRAINS (2009), Population Census (1990), Podes (1993), Susenas (1993), Input–output Table (1990), and authors’ calculations

Similar content being viewed by others

Notes

  1. On the other hand, Boler et al. (2017) find that exporting firms in Norway have a higher gender wage gap than non-exporters, particularly if export destinations are in different time zones. They argue this reflects increased discrimination when employers require their employees to work particular hours and travel on short notice.

  2. Due to missing data for some years, we are restricted to these 3-year intervals for a consistent district panel.

  3. We apply 1993 district definitions to account for district splits that occurred during the study period. These splits followed sub-district boundaries within districts without changing borders with neighboring districts.

  4. By these definitions, participation in work and domestic duties are not mutually exclusive: A person can report domestic duties as her primary activity, but also report working one or more hours during the past week. In this case, she would be considered part of the work force, but also engaged in domestic duties. Hence, being a worker involves doing even limited amounts of market work, while being engaged in domestic duties requires this to be a person’s primary activity.

  5. As the Susenas does not record individuals’ earnings, and there is no other source of data on gender-specific wages or income at the district level (Indonesia’s labor force survey was representative only at the province level for the analyzed time period, and the manufacturing census does not record wages by gender), we cannot analyze gender-specific wages. We therefore focus on work participation as the main labor market outcome in our analysis.

  6. We use a simple average in order to be consistent with the aggregation method used by UNCTAD to construct four-digit SITC tariffs from more detailed (ten-digit) product line data. Alternatively, UNCTAD-TRAINS also provides weighted averages, using current import volumes as weights. Yet we prefer not to use these since import volumes are endogenous to import tariff levels.

  7. Districts are suitable geographic units to reflect labor markets for our study, as they differentiate major municipalities from rural districts and serve as the main administrative and economic units within the country.

  8. Our main findings are robust to how we deal with the non-tradable sector. Inclusion of the non-tradable sector in the district-level tariff measures, as well as using Topalova’s instrumental variables approach, produces very similar estimation results. These are not reported in the paper but are available from the authors.

  9. Note that although Topalova (2010) has much more disaggregated sectoral data in her analysis of trade liberalization and poverty in India, Kovak (2013) also relies on variation across 20 tradable industries for the analysis of trade liberalization and wages in Brazil.

  10. Indonesia imposes a minimum wage policy where minimum wage levels are determined at provincial level (we have 259 districts across 23 provinces in our sample). Alatas and Cameron (2008) study the impact of a minimum wage hike on Java and find that this had a greater impact on female wages as these tend to be lower than male wages. However, they find little evidence that the minimum wage increase affected employment. Nevertheless, we include local minimum wages as control variable.

  11. In addition, input tariff reductions lead to a small increase in weekly work hours of men with primary education (results are reported in the supplementary appendix), while we see no effects of input tariff reductions for men with no completed education or with education above primary.

  12. For men, we find that input tariff reductions increase work hours only in the age group 15–19, while work participation is not affected for any age group. (Results are reported in supplementary appendix.)

  13. The results are reported in supplementary appendix.

  14. One could worry that, given this correlation, our tariff measure picks up initial female work participation. For example, districts with a large share of total 1990 employment in the textiles sector, and hence a relatively high initial female participation rate, are more exposed to tariff reductions. Yet in all first difference estimations reported in panel B we control for the initial value of the dependent variable and hence allow aggregate trends to vary by initial female participation. Further note that tariff reductions are not correlated with the initial share of educated workers across sectors (see Fig. 3), which suggests that the variation in female intensity across sectors is not merely capturing differences in skill intensity.

  15. We also show in Fig. 3 that there is no correlation between industries’ skill intensity and tariff reductions. This suggests that the concentration of employment effects among low-skilled females (rather than high-skilled females) does not reflect the sectoral structure of tariff reductions, but rather within-industry adjustments, in line with the results of Amiti and Cameron (2012).

  16. Borrowman and Klasen (2017) conduct cross-country fixed effects estimations, with trade openness measured as the ratio of exports to GDP, and controlling for GDP per capita and female labor force participation rates, among others.

  17. Relative demand for female workers could also increase if capital is more complementary to female labor than to male labor (see Galor and Weil 1996).

  18. We do not have detailed enough data on occupations to estimate the effects on blue-collar and white-collar employment.

  19. Alternative specifications with the number of life births per woman yield comparable results.

  20. We also estimated the effect of output and input tariffs on education- and age-group-specific population composition. We find no significant effects in any sub-group, except for the uneducated (those with less than primary education). In this group, input tariff reductions are associated with a small increase in the male population share.

References

  • Alatas, V., and L. Cameron. 2008. The impact of minimum wages on employment in a low-income country: A Quasi-natural experiment in Indonesia. Industrial and Labor Relations Review 61 (2): 201–223.

    Article  Google Scholar 

  • Amiti, M., and L. Cameron. 2012. Trade liberalization and the wage skill premium: Evidence from Indonesia. Journal of International Economics 87 (2): 277–287.

    Article  Google Scholar 

  • Amiti, M., and J. Konings. 2007. Trade liberalization, intermediate inputs and productivity: Evidence from Indonesia. American Economic Review 97 (5): 1611–1638.

    Article  Google Scholar 

  • Autor, D., D. Dorn, and G. Hanson. 2017. When work disappears: Manufacturing decline and the Falling marriage-market value of men. Unpublished manuscript, July 2017.

  • Basri, M.C. 2001. The political economy of manufacturing protection in Indonesia, 1975–1995. Canberra: Australian National University.

    Google Scholar 

  • Basri, M.C., and H. Hill. 1996. The political economy of manufacturing protection in LDCs: An Indonesian case study. Oxford Development Studies 24 (3): 241–259.

    Article  Google Scholar 

  • Becker, G.S. 1957. The economics of discrimination. Chicago: University of Chicago Press.

    Google Scholar 

  • Becker, G.S. 1981. A treatise on the family. Cambridge: Harvard University Press.

    Google Scholar 

  • Ben Yahmed, S., and P. Bombarda. 2017. Gender, informal employment and trade liberalization in Mexico, Unpublished manuscript, December 2017.

  • Black, S.E., and E. Brainerd. 2004. Importing equality? The impact of globalization on gender discrimination. Industrial and Labor Relations Review 57 (4): 540–559.

    Article  Google Scholar 

  • Blau, F.D., L.M. Kahn, and J. Waldfogel. 2000. Understanding young women’s marriage decisions: the role of labor and marriage market conditions. Industrial and Labor Relations Review 53 (4): 624–647.

    Article  Google Scholar 

  • Boler, E. A., B. Javorcik, and K.H. Ulltveit-Moe. 2017. Working across time zones: Exporters and the gender wage gap. Unpublished paper.

  • Borrowman, M., and S. Klasen. 2017. Drivers of gendered occupational and sectoral segregation in developing Countries. Courant Research Centre: Poverty, Equity and Growth—Discussion Papers 222.

  • BPS. 1989. National Indonesia Contraceptive Prevalence Survey 1987. Jakarta: Statistics Indonesia (BPS).

    Google Scholar 

  • BPS. 2013. Indonesia Demographic and Health Survey 2012. Statistics Indonesia (BPS) and Macro International: Calverton, Maryland.

    Google Scholar 

  • Cameron, L. A., D. Contreras-Suarez, E. Pye. 2015. Gender Inequality in Indonesia. A Report prepared in collaboration with the Australian-Indonesian Partnership for Economic Governance and the Australian Department of Foreign Affairs and Trade. http://users.monash.edu.au/~clisa/papers/Gender%20Inequality%20in%20Indonesia.

  • Do, Q.T., A.A. Levchenko, and C. Raddatz. 2016. Comparative advantage, international trade, and fertility. Journal of Development Economics 119: 48–66.

    Article  Google Scholar 

  • Duncan, O.D., and B. Duncan. 1955. A methodological analysis of segregation indexes. American Sociological Review 20 (2): 210–217.

    Article  Google Scholar 

  • Gaddis, I., and J. Pieters. 2017. The gendered labor market impacts of trade liberalization: Evidence from Brazil. Journal of Human Resources 52 (2): 457–490.

    Article  Google Scholar 

  • Galor, O., and D.N. Weil. 1996. The gender gap. Fertility and Growth, American Economic Review 86 (3): 374–387.

    Google Scholar 

  • Goldberg, P.K., and N. Pavcnik. 2007. Distributional effects of globalization in developing countries. Journal of Economic Literature 45 (1): 39–82.

    Article  Google Scholar 

  • Hardjono, J., N. Akhmadi, and S. Sumarto. 2010. Poverty and social protection in Indonesia. Singapore: Institute of Southeast Asian Studies.

    Book  Google Scholar 

  • Heath, R., and A.M. Mobarak. 2015. Manufacturing growth and the lives of Bangladeshi women. Journal of Development Economics 115: 1–15.

    Article  Google Scholar 

  • Hirata, G., and R.R. Soares. (2016). Competition and the racial wage gap: Testing Becker’s model of employer discrimination. IZA Discussion Paper 9764.

  • Jensen, R. 2012. Do labor market opportunities affect young women’s work and family decisions: Experimental evidence from India. Quarterly Journal of Economics 127 (2): 753–792.

    Article  Google Scholar 

  • Juhn, C., G. Ujhelyi, and C. Villegas-Sanchez. 2014. Men, women, and machines: How trade impacts gender inequality. Journal of Development Economics 106: 179–193.

    Article  Google Scholar 

  • Keller, W., and H. Utar. 2018. Globalization, gender, and the family. Unpublished manuscript.

  • Kis-Katos, K., and R. Sparrow. 2011. Child labor and trade liberalization in Indonesia. Journal of Human Resources 46 (4): 722–749.

    Article  Google Scholar 

  • Kis-Katos, K., and R. Sparrow. 2015. Poverty, labor markets and trade liberalization in Indonesia. Journal of Development Economics 117: 94–106.

    Article  Google Scholar 

  • Kovak, B.K. 2013. Regional effects of trade reform: What is the correct measure of liberalization? American Economic Review 103 (5): 1960–1976.

    Article  Google Scholar 

  • Meñezes-Filho, N.A., and M.A. Muendler. 2011. Labor reallocation in response to trade reform. NBER Working Paper 17372, National Bureau of Economic Research.

  • Priebe, J. 2010. Child costs and the causal effect of fertility on female labor supply: An Investigation for Indonesia 1993–2008. Courant Research Centre—Poverty, Equity and Growth Discussion Papers, 45. http://www.uni-goettingen.de/en/67061.html.

  • Sauré, P., and H. Zoabi. 2014. International trade, the gender wage gap and female labor force participation. Journal of Development Economics 111: 17–33.

    Article  Google Scholar 

  • Shaner, S., and S. Das. 2016. Female labor force participation in Asia: Indonesia country study. Economics Working Paper 474, Asian Development Bank.

  • Topalova, P. 2010. Factor immobility and regional impacts of trade liberalization: Evidence on Poverty from India. American Economic Journal: Applied Economics 2 (4): 1–41.

    Google Scholar 

  • Wacziarg, R., and J. Wallack. 2004. Trade liberalization and intersectoral labor movements. Journal of International Economics 64 (2): 411–439.

    Article  Google Scholar 

  • WTO. 1998. Trade policy review Indonesia. Geneva: World Trade Organization.

    Google Scholar 

Data Sources

Download references

Acknowledgements

We thank Arjun S. Bedi, Michael Grimm, Stephan Klasen, Günther Schulze, seminar participants at the University of Antwerp, the University of Bielefeld, the University of Freiburg, Erasmus University Rotterdam and conference participants at the Annual International Conference of the Research Group on Development Economics in Heidelberg 2016, the Labor Economy Conference in Budapest 2016, the IMF conference on Gender and Macroeconomics 2017, the Nordic Conference in Development Economics in Gothenburg 2017, and the ETSG conference in Florence 2017 for useful comments. We would also like to thank two anonymous referees and a co-editor for their helpful comments and suggestions. Janneke Pieters gratefully acknowledges financial support for this work under the Growth and Economic Opportunities for Women (GrOW) initiative. GrOW is a multi-funder partnership with the UK Government Department for International Development, The William and Flora Hewlett Foundation, and Canada’s International Development Research Centre (IDRC). The views expressed herein do not necessarily represent those of IDRC or its Board of Governors.

Author information

Authors and Affiliations

  1. Department of Economics, University of Göttingen, Platz der Göttinger Sieben 3, Göttingen, Germany

    Krisztina Kis-Katos

  2. Wageningen University, Wageningen, Netherlands

    Janneke Pieters & Robert Sparrow

  3. Erasmus University Rotterdam, Rotterdam, Netherlands

    Robert Sparrow

  4. Australian National University, Canberra, Australia

    Robert Sparrow

  5. IZA Institute of Labor Economics, Bonn, Germany

    Krisztina Kis-Katos, Janneke Pieters & Robert Sparrow

Authors
  1. Krisztina Kis-Katos
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Janneke Pieters
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Robert Sparrow
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Krisztina Kis-Katos.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary material 1 (DOCX 17 kb)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Kis-Katos, K., Pieters, J. & Sparrow, R. Globalization and Social Change: Gender-Specific Effects of Trade Liberalization in Indonesia. IMF Econ Rev 66, 763–793 (2018). https://doi.org/10.1057/s41308-018-0065-5

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41308-018-0065-5

Search

Navigation