Importing Inequality: Trade Liberalization, Technology, and Women's Employment

https://www.grips.ac.jp/list/jp/facultyinfo/wie-dainn/In this paper, we investigate the impact of trade liberalization on the demand for female workers using Indonesia’s tariff reduction in the 1990s and 2000s as a natural experiment. This paper utilizes variation in output and input tariffs to examine two different channels through which trade liberalization affects female employment: import competition and imported technology. We find that a 10%-point reduction in output and input tariffs hurt women’s employment by 0.5% point and 4.5% point, respectively, in light industries in the 1990s. We show that output tariffs affect women’s employment in a competitive industry, while input tariffs increase firms’ utilization of foreign inputs instead of domestic inputs. We also find that output tariffs encourage women’s employment in heavy industry, while input tariffs have hurt women’s employment in heavy industry since 2000. Our results suggest that there exists a race between gender inequality in education and imported technology in developing countries.JEL Classification Codes: F14, F66, J16, J24We thank the Japan Society for Promotion of Science for financial support under the Young Scientist (B) Grant (#16K17113).technical repor