Globalization and gender gap in Indonesia.

Abstract

This thesis contributes to the growing literature of economic development by analyzing the effects of exposure to globalization on gender gap in labour market participation in Indonesia. I combine the individual-level data of three waves (1997, 2000 and 2007) of Indonesian Family Life Survey (IFLS), with the provincial level data on exports and imports and also use data on population size of all cities in Indonesia by calculating geodesic distance between these cities and the individual’s residence. I construct the province-level Population Gravity Index (PGI) score for each individual based on the idea that cities with larger populations exert more force (or gravity) of globalization, but this force weakens as an individual is located in more remote areas. I interact the individual’s PGI score with provincial exports and imports and sum over all provinces to construct two explanatory variables .export exposure (XEX) and import exposure (IEX). The dependent variables are related to intensive and extensive measures of employment outcomes. I estimate the effects of export and import exposure on probability of paid work for females and males aged from 20 to 65 years controlling for household fixed effects and province- year fixed effects. I find significant results for gender specific effects in labour force participation in Indonesia. The main findings of the thesis provide evidence that women’s work participation is positively responsive to import exposure, and negatively to export exposure. However, I find no significant effects for males working less for pay with export exposure. This means exposure to exporting activities increases household income by increasing income earned by males, and this positive household income effect, in turn, discourages women’s participation in paid work. Therefore, labour supply of men is inelastic in response to export exposure and import exposure. Meanwhile, to be consistent with the income effect, I also look at the probability of paid work in a particular sector. The result shows that females likely to work less both in agriculture and manufacturing sector with an export exposure. To get a closer view of working population’s income status, I observe various employment outcomes by work status. The result is also consistent with the income effect story as I find significant evidence that females prefer to do housework than any other jobs in response to export exposure. This result is also consistent with the income effect story that exposure to exporting activities increases household income by increasing income earned by males, and this positive household income effect discourages women’s participation in paid labour market exhibiting a pronounced gender gap in labour force participation in Indonesia.