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Abstract
In the past two decades, Indonesia has experienced an increase in total trade and FDI. In the period 2008-2014, there was an increase of FDI volume, which was followed by a widening trend in the female and male earnings gap. This study investigates the impact of trade openness on female-male earnings differentials and how the impact differs across the wage distribution. This thesis used data employment from the National Labor Survey (SAKERNAS) published by Statistics Indonesia and FDI data released by the Investment Coordinating Board (BKPM). Furthermore, after applying the OLS and the Quantile Regression estimation method, it appears that gender wage gap is narrower in low quantile wage distributions than in high quantile distributions. Also, another important finding emerges from the results of provincial income groups, which shows that gender wage differentials are narrower in high-income and middle provinces than in low-income provinces.
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References
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- Arora, R. U. (2012). Gender inequality, economic development, and globalization: A state level analysis of India. The Journal of Developing Areas, 46(1), 147-164.
- Artecona, R., & Cunningham, W. (2002). Effects of trade liberalization on the gender wage gap in Mexico. Development Research Group. The World Bank.
- Becker, G. (1957). The economics of discrimination. Chicago: The University of Chicago Press.
- Berik, G., Meulen Rodgers, Y. V., & Zveglich, Jr, J. (2004). International trade and gender wage discrimination: Evidence from East Asia. Review of Development Economics, 8(2), 237–254.
- Berman, E., Bound, J., & Stephen, M. (1998). Implications of skill-biased technological change: International Evidence. Working Paper, National Bureau of Economic Research, International Trade and Investment, Labor studies and Productivity, Cambridge.
- Black, S., & Brainerd, E. (2004). Importing quality? The impact of globalization on gender discrimination. Industrial and Labor Relations Review, 57(4), 540-559.
- Braunstein, E., & Brenner, M. (2007). Foreign direct investment and gendered wages in Urban China. Feminist Economics, 13(3-4), 213 – 237. doi:10.1080/13545700701439432
- Cameron, L., Suarez, D. C., & Pye, E. (2015). Gender inequality in Indonesia. Monash University, Center for Development Economic and Sustainability (CDES). Melbourne: Australian Department of Foreign Affairs and Trade (DFAT).
- Chen, Z., Ge, Y., Lai, H., & Wan, C. (2013). Globalization and gender wage inequality in China. World Development, 4, 256–266.
- Dollar, D., & Gatti, R. (1999). Policy research report on gender development: Gender inequality, income, and growth: Are good times good for women? Poverty Reduction and Economic Management Network. The World Bank.
- Driffield, N., & Taylor, K. (2000). FDI and the labor market: A review of the evidence and policy implications. Oxford Review of Economic Policy, 16(3), 90-103.
- Feenstra, R. C., & Hanson, G. H. (1997). Foreign direct investment and relative wages: Evidence from Mexico's Maquiladoras. Journal of International Economics, 42, 371-394.
- Feridhanusetyawan, T., Aswicahyono, H., & Perdana, A. A. (2001). The male-female wage differentials in Indonesia. CSIS Working Paper Series, Center for Strategic and International Studies (CSIS), Department of Economics, Jakarta.
- Fitrania, S. (2013). Master Thesis: The Impact of globalization on gender wage gap in Indonesia: A sub-national level analysis. Tilburg University.
- Fussell, E. (2000). Making labor flexible: The recomposition of Tijuana’s maquiladora female labor force. Feminist Economics, 6(3), 59-79.
- Han, J., Liu, R., & Zhang, J. (2012). Globalization and wage inequality: Evidence from urban China. Journal of International Economics, 87, 288-297.
- Hazarika, G., & Otero, R. (2004, June). Foreign trade and the gender earnings differential in Urban Mexico. Journal of Economic Integration, 19(2), 353-373.
- Juhn, C., Ujhelyi, G., & Villegas-Sanchez, C. (2014). Men, women, and machines: How trade impacts gender inequality. NBR Working Paper, Natioanal Bureau of Economic Research, Cambridge.
- Kercheval, J., Markowitz, D., Monson, K., & Read, B. (2012). Perempuan dalam kepemimpinan - penelitian mengenai hambatan terhadap ketenagakerjaan dan pekerjaan yang layak bagi perempuan. International Labor Organization, Jakarta.
- Khanna, S. (2012). Gender wage discrimination in India: Glass ceiling or sticky floor?. Working Paper No.214. Centre for Development Economics, Department of Economics. New Delhi: Delhi School of Economics.
- Lee, J.-W., & Wie, D. (2015). Technological change, skill demand, and wage inequality: Evidence from Indonesia. World Development, 67, 238-250.
- Lemieux, T. (2003). The "mincer equation" thirty years after schooling, experience and earnings:. Working Paper No. 62. Center For Labor Economics. Berkeley: University of California.
- Menon, N., & Rodgers, Y. V. (2009). International trade and the gender wage gap: New Evidence from India’s Manufacturing Sector. World Development, 37(5), 965–981.
- Meulen Rodgers , V. Y., & Zveglich, Jr, J. E. (2012). Inclusive growth and gender inequality in Asia’s Labor Market. Economics and Research Department. Manila: Asian Development Bank.
- Ministry of Children and Women Empowerment of Indonesia. (2014). Human development gender-based report 2014. Jakarta: Ministry of Children and Women Empowerment of Indonesia.
- Oostendorp, R. H. (2009). Globalization and the gender wage gap. The World Bank Economic Review, 23(1), 141-161.
- Pham, T.-H., & Reilly, B. (2007, April 02). The gender pay gap in Vietnam, 1993–2002: A quantile regression approach. Journal of ASIAN Economics, 18, 775–808.
- Pirmana, V. (2006). Earnings differential between male-female in Indonesia: Evidence from SAKERNAS Data. Departement of Economics. Bandung: Padjajaran University.
- Reilly , B., & Dutta, P. V. (2005). The gender pay gap and trade liberalisation: Evidence for India. PRUS Working Paper, University of Sussex, Department of Economics.
- Seguino, S. (1997). Gender wage inequality and exportâ€led growth in South Korea. The Journal of Development Studies, 34, 102-132.
- Sohn, K. (2015). Gender discrimination in earnings in Indonesia: Fuller picture. Bulletin of Indonesian Economic Studies, 51(1), 95–121. doi:10.1080/00074918.2015.1016569
- Taniguchi, K., & Tuwo, A. (2014). New evidence on the gender wage gap in Indonesia: ADB Economics Working Paper Series. Asian Development Bank. Manila: ADB Economics.
- Thomas, D. (1990). Intra-household resource allocation: An inferential approach. The Journal of Human Resources, 24(4), 635-664.
- United Nations Development Programme (UNDP). (2016). Human Development Report 2016: Human development for everyone. New York: UNDP.
- Wooldridge, J. M. (2012). Introductory econometrics a modern approach: 5th Edition. Cengage Learning.
- Xiu, L., & Gunderson, M. (2014). Glass ceiling or sticky floor? Quantile regression decomposition of the gender pay gap in China. International Journal of Manpower, 35(3), 306-325.
References
Adireksombat, K., Fang, Z., & Sakellariou, C. (2010). The evolution of gender wage differentials and discrimination in Thailand: 1991-2007: An application of unconditional quantile regression. Working Paper No. 2010/05. Economic Growth Centre, Division of Economics. Singapore: Nanyang Technological University.
Arora, R. U. (2012). Gender inequality, economic development, and globalization: A state level analysis of India. The Journal of Developing Areas, 46(1), 147-164.
Artecona, R., & Cunningham, W. (2002). Effects of trade liberalization on the gender wage gap in Mexico. Development Research Group. The World Bank.
Becker, G. (1957). The economics of discrimination. Chicago: The University of Chicago Press.
Berik, G., Meulen Rodgers, Y. V., & Zveglich, Jr, J. (2004). International trade and gender wage discrimination: Evidence from East Asia. Review of Development Economics, 8(2), 237–254.
Berman, E., Bound, J., & Stephen, M. (1998). Implications of skill-biased technological change: International Evidence. Working Paper, National Bureau of Economic Research, International Trade and Investment, Labor studies and Productivity, Cambridge.
Black, S., & Brainerd, E. (2004). Importing quality? The impact of globalization on gender discrimination. Industrial and Labor Relations Review, 57(4), 540-559.
Braunstein, E., & Brenner, M. (2007). Foreign direct investment and gendered wages in Urban China. Feminist Economics, 13(3-4), 213 – 237. doi:10.1080/13545700701439432
Cameron, L., Suarez, D. C., & Pye, E. (2015). Gender inequality in Indonesia. Monash University, Center for Development Economic and Sustainability (CDES). Melbourne: Australian Department of Foreign Affairs and Trade (DFAT).
Chen, Z., Ge, Y., Lai, H., & Wan, C. (2013). Globalization and gender wage inequality in China. World Development, 4, 256–266.
Dollar, D., & Gatti, R. (1999). Policy research report on gender development: Gender inequality, income, and growth: Are good times good for women? Poverty Reduction and Economic Management Network. The World Bank.
Driffield, N., & Taylor, K. (2000). FDI and the labor market: A review of the evidence and policy implications. Oxford Review of Economic Policy, 16(3), 90-103.
Feenstra, R. C., & Hanson, G. H. (1997). Foreign direct investment and relative wages: Evidence from Mexico's Maquiladoras. Journal of International Economics, 42, 371-394.
Feridhanusetyawan, T., Aswicahyono, H., & Perdana, A. A. (2001). The male-female wage differentials in Indonesia. CSIS Working Paper Series, Center for Strategic and International Studies (CSIS), Department of Economics, Jakarta.
Fitrania, S. (2013). Master Thesis: The Impact of globalization on gender wage gap in Indonesia: A sub-national level analysis. Tilburg University.
Fussell, E. (2000). Making labor flexible: The recomposition of Tijuana’s maquiladora female labor force. Feminist Economics, 6(3), 59-79.
Han, J., Liu, R., & Zhang, J. (2012). Globalization and wage inequality: Evidence from urban China. Journal of International Economics, 87, 288-297.
Hazarika, G., & Otero, R. (2004, June). Foreign trade and the gender earnings differential in Urban Mexico. Journal of Economic Integration, 19(2), 353-373.
Juhn, C., Ujhelyi, G., & Villegas-Sanchez, C. (2014). Men, women, and machines: How trade impacts gender inequality. NBR Working Paper, Natioanal Bureau of Economic Research, Cambridge.
Kercheval, J., Markowitz, D., Monson, K., & Read, B. (2012). Perempuan dalam kepemimpinan - penelitian mengenai hambatan terhadap ketenagakerjaan dan pekerjaan yang layak bagi perempuan. International Labor Organization, Jakarta.
Khanna, S. (2012). Gender wage discrimination in India: Glass ceiling or sticky floor?. Working Paper No.214. Centre for Development Economics, Department of Economics. New Delhi: Delhi School of Economics.
Lee, J.-W., & Wie, D. (2015). Technological change, skill demand, and wage inequality: Evidence from Indonesia. World Development, 67, 238-250.
Lemieux, T. (2003). The "mincer equation" thirty years after schooling, experience and earnings:. Working Paper No. 62. Center For Labor Economics. Berkeley: University of California.
Menon, N., & Rodgers, Y. V. (2009). International trade and the gender wage gap: New Evidence from India’s Manufacturing Sector. World Development, 37(5), 965–981.
Meulen Rodgers , V. Y., & Zveglich, Jr, J. E. (2012). Inclusive growth and gender inequality in Asia’s Labor Market. Economics and Research Department. Manila: Asian Development Bank.
Ministry of Children and Women Empowerment of Indonesia. (2014). Human development gender-based report 2014. Jakarta: Ministry of Children and Women Empowerment of Indonesia.
Oostendorp, R. H. (2009). Globalization and the gender wage gap. The World Bank Economic Review, 23(1), 141-161.
Pham, T.-H., & Reilly, B. (2007, April 02). The gender pay gap in Vietnam, 1993–2002: A quantile regression approach. Journal of ASIAN Economics, 18, 775–808.
Pirmana, V. (2006). Earnings differential between male-female in Indonesia: Evidence from SAKERNAS Data. Departement of Economics. Bandung: Padjajaran University.
Reilly , B., & Dutta, P. V. (2005). The gender pay gap and trade liberalisation: Evidence for India. PRUS Working Paper, University of Sussex, Department of Economics.
Seguino, S. (1997). Gender wage inequality and exportâ€led growth in South Korea. The Journal of Development Studies, 34, 102-132.
Sohn, K. (2015). Gender discrimination in earnings in Indonesia: Fuller picture. Bulletin of Indonesian Economic Studies, 51(1), 95–121. doi:10.1080/00074918.2015.1016569
Taniguchi, K., & Tuwo, A. (2014). New evidence on the gender wage gap in Indonesia: ADB Economics Working Paper Series. Asian Development Bank. Manila: ADB Economics.
Thomas, D. (1990). Intra-household resource allocation: An inferential approach. The Journal of Human Resources, 24(4), 635-664.
United Nations Development Programme (UNDP). (2016). Human Development Report 2016: Human development for everyone. New York: UNDP.
Wooldridge, J. M. (2012). Introductory econometrics a modern approach: 5th Edition. Cengage Learning.
Xiu, L., & Gunderson, M. (2014). Glass ceiling or sticky floor? Quantile regression decomposition of the gender pay gap in China. International Journal of Manpower, 35(3), 306-325.