1 modeling gender effects of pakistan’s trade liberalization rizwana siddiqui pakistan institute...
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Modeling Gender Effects of Pakistan’s Trade Liberalization
Rizwana SiddiquiPakistan Institute of Development Economics
Perspectives on Impact evaluationCairo Conference, Egypt March 31, 2009
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Outline
Introduction
Methodology – Gender Sensitive CGE
Data - Gender Sensitive SAM
Simulation Results
Conclusion
3
Introduction
Gender Inequalities in Pakistan
women are
– Less fed – Low health status– Less educated– Less mobile– Located in low paid jobs– Wage rate is low – Market work under estimated– Household work is completely ignored– Over loaded by Work
4
cont….
• Bias in Intrahousehold Allocation of Resources
• Bias in Division of Labour
Constraints Men and Women Face Differ
5
Policy Effects
Trade Liberalization and Gender Effects
– Change in structure of employment and prices
• Time Allocation
• Consumption
• Incidence of poverty- time, capability, income
6
ObjectiveThe objective of the present study is
to measure gender dimensions of effects of Trade Liberalization in Pakistan using a comprehensive frame work that takes into account:
– Market work, household work, leisure
– Men and Women Labour
– Consumption of men and women
Measure effects using gender based poverty indicators
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Development of Gender Aware CGE
1. Production – Integrate market and non-market sectors
2. Labour by gender
3. Rigidities
4. Consumption by Gender
5. Poverty Indicators by Gender
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DATAConstruction of Gender SAM
1. Traditional SAM-based on market economy
2. Integration of Market Economy and Household Economy
3. Female Participation Adjusted with new data
4. SNA Classification is used to Categorize market, household, and leisure
5. Evaluation of Non Market Work—Opportunity cost of labor
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AssumptionsAll activities are separable
Minimum time required for self care is 10Hours/d
Rest of the hours/d are distributed between Market, Household and Leisure activities
Households Produced Goods are consumed by Households themselves
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Structure of SAM-1990 Market Sector (20)—Agriculture (5) , Industry ( 9)
Services ( 7)
Non Market Sectors(18)— Nine categories of households are identified with nine social reproduction sectors and nine leisure sectors
Factors of Production—Labor (8)—Grouped by Gender and education
—Capital By Sector
Households(9)—4 Urban by education level of hh and 5 Rural by Gender and then male head hh by employment status.
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Salient Features of Gender SAM
1. It makes invisibility of women's household work visible.
2. Hidden market work: Improved female participation- female participation in the market is over 50 % instead of 12%
3. Female labour increases from 3.1 million (OLD) to about 15 million
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Female Labour Force Participation Rate (based on
old and new data collection techniques)
0
10
20
30
40
50
1 2 3
years
FL
FP
R (
%)
Series1 Series2
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Time Allocation between market and non market
activities Women
Urban• Market – 26.5 to 40 %• Household- 34.1 to
45.3%• Leisure- 10 to 20 %
Rural• Market-34.1 to 45.3 %• Households-35.9 to
47.3%• Leisure-10 to 20%
MenUrban • Market – 50.6 to 57.4%• Household- 2.9 to10.7
%• Leisure- about 40%
Rural• Market- 47.5 to 53.3%• Households-1.6 to
16.8%• Leisure-about 40 %
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Time allocation by Gender in Market Economy
Male Labour in hours Female labour in hours
Sectors No-Educatio
n
Low-Educati
on
Med-Educat
ion
High-Educat
ion
NoEducati
on
LowEducati
on
Med-Educati
on
HighEducat
ion
Crop* 39.5 21.3 21.8 7.9 66.2 55.5 51.9 0.0
Live Stock
11.5 6.5 5.9 1.8 10.0 11.2 6.5 0.0
Textile 6.3 6.5 7.9 3.9 9.5 18.6 19.7 27.0
Machinery
1.8 4.3 3.4 2.0 0.0 0.0 0.0 0.5
Public Administration**
8.0 13.2 16.8 31.5 4.3 0.0 0.3 13.3
Education and Health**
1.4 2.3 4.3 13.5 1.3 0.0 0.9 26.7
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yHousehold Reciepts by Source and Poverty
020406080
100120140160
NoEd
ucat
ion
Low
Educ
atio
n
Med
ium
Educ
atio
n
High
Educ
atio
n
Empl
oyee
Fem
ale-
Head
edHo
useh
olds
Self-
Empl
oyed
Oth
er
Empl
oyer
Household
shar
e (%
)
Labor Capital Dividends Govt Transfers Remittances Poverty
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Structure of Demand
• Inequality in Consumption by Region
• Rural households (70%)—Consumption 52%.
• Urban households (30%)—Consumption 48 %.
• Household and Intermediate consumption account for over 85.4% of total demand
• Exports—6.6 %
• Investment—8 %
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Consumption by Gender
• An equation based on Working Engel Curve
• Where w is share of good i, x total expenditure, n household size, F number of adult equivalent males and number of adult equivalent females
• We calculated out lay equivalent ratio for both male and females.
• Where G = F and M
iunxFMw ii )/ln(21
n
x
xq
Gq
i
jiijG
/
/
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Intra Households Allocation of Resources
Significant Difference - food, clothing, education and health consumption of men and women. Other commodities are like public goods which are consumed by men and women equally, i.e., housing, sanitation facilities and utilities such as water, electricity, and gas etc.
Using Following Ratio Household Consumption Disaggregated by gender
MF
Ff CC
Ca
MF
Mm CC
Ca
where af + am =1
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Intra Households Allocation of Resources Urban
Crop-(Vegetables, and cereals) –ALL HH-W
Live stock & poultry-all hh Men
Cloth- Poor- MenRich-women
Education and Health• Poor-female• Rich-male=female
Rural
Crop and Live Stock
Men > Women
Clothing vary by type of hh
Rich – Women
Poor-Men
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CGE ModelProduction - 3
Market sectors—TwentyHouseholds Social Reproduction—Nine
Leisure—Nine
Labor by gender and by education levelMen-(4)—No education, below primary, 5-9 years,
Ed>10Women-(4)—No education, below primary, 5-9
metric, above
Consumption of MenWomen
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Cont…
• It is assumed that non market sectors, leisure and reproduction, behaves like market sectors.
• Household consume all goods produced social reproduction and leisure
• Price of non market goods is the opportunity cost of labor used in these activities.
• Market rigidities are introduced by keeping low elasticities of substitution
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Consumption of Market and Non-Market Goods
Maximizing Stone-Geary utility function
• S.t
• Income constraint
• Time constraint
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Other Features of the MODEL• Goods with same sectoral classification are different in
qualities for domestic markets and foreign markets.
• Imports and domestically produced goods are imperfect substitutes.
• CES and CET functions describe substitution and transformation possibilities reflecting empirical realities, respectively, for the above two functions.
• Model is calibrated to SAM data using parameters estimated from SAM and econometrically estimated elasticities.
• Model is solved using GAMS software.
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Closure
CAB and Nominal exchange rate are constant and real exchange rate adjust to keep the balance.
Government consumption and Investment are kept fixed in real term for welfare and poverty analysis.
Savings equal Investment
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Poverty and Welfare Analysis
A. Capability Poverty Indicators-
• 1. IMR—Measure satisfaction of at least 4 basic needs
• 2. LR—Education
hHEPC
hPC
base
CGCHA
IMRIMRIMRIMR
__min
min **1
)(
eHEPC
CGePC
CHA
LRLRLRLR
base
_*_*1
)max
(
max
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Cont…
• Income Poverty—Absolute and Relative
— Absolute - FGT Indices
— Relative Women share in poor population
•Time Poverty—Absolute and Relative —Change in leisure of men and women over base
value —change in leisure of women relative to men
Welfare -- EV-based on consumption of market goods– EV-based on consumption of market and non market goods
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Simulation: Revenue Neutral Trade Liberalization
• Tariff Reduction
• Sales tax increases
Figure 1. Custom Duties and Sales Tax as Percentage of Government Revenue
0
5
10
15
20
25
30
35
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Year
Percentages
Custom duties Sales Taxes
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Variation in Macro Aggregates
Sectors M/Q E/Xs
Trade Liberalization
PC PM Q D M E VA
Agriculture 3.5 1.05 -1.32 -2.45 -0.21 -0.27 1.47 3.5 -0.23
Industry 26.8 15.2 -4.01 -8.48 0.03 -1.18 3.41 4.34 -0.19
Textile 3.8 42 -2.2 -5.4 1.2 1.0 4.7 4.6 2.6
Machinery 61.5 3.5 -8 -9.5 1.2 -2.4 3.5 6 -2.1
Services 4.9 6.1 -1.8 0.66 -0.39 -0.08 -2.98 2.22 -0.19
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Factor Market Effects
Market Sectors
Female Labour Male Labour
No Low Med High
Total
No LowMediu
m High
Total
Total Lab
Edu Edu Edu Edu Edu Edu Edu Edu
Agriculture 0.2 -1.9 -2.5 0 -1.12 0.91 -2.4 -0.66 -4.57 -0.1 -0.42
Textile 7 4.7 4.2 1.8 4.34 7.9 4.5 6.4 2.4 6.12 5.3
Chemicals -6.1 0 -9.2 -10.7 -9.21 -5.4 -8.1 -7.2 -10.2 -8.54 -8.6
Non-Metallic -6.3 0 0 0 -6.28 -5.5 -8.2 -7.7 -10.4 -6.39 -6.4
Metallic 0 0 0 0 0 -8.6 -11.2 -10.7 -13.3 -11.62 -11.7
Industry 6.24 4.65 1.72 -0.68 2.17 1.04 -1.91 -0.43 -5.64 -1.21 -0.41
Services -4 -1 -1.7 -3.5 -2.66 3.9 0.9 1.5 -1.5 -0.31 -0.54
Total 0.84 -0.99 -1.62 -2.34 -0.73 -1.2 -4.2 -2.6 -6.2 -0.4 -0.47
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Labor to Non Market Activities
HouseholdSocial Reproduction Leisure
Urban households 0.48 1.8
No-Education -1.5 -0.8
Low-Education 4 6.4
Med-Education 0.3 1.6
High-Education 3 3.9
Rural households -0.45 -1.4
Employee Male -1.6 -1.8
Female-Headed 2.8 4.8
Self-Employed -1.1 -1.4
Other -1.2 -1.5
Employer -0.8 1.2
Total -0.02 0.16
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Variation in Wage Income, Expenditure and CPI
Household
Women wage Incom
eMen Wage
Income CPI
Household Expenditu
re
Urban 2.7 1.3 -1.6 1.06
No-Education 1.3 -1.2 -1.6 -1.7
Low-Education 2.6 0.9 -1.6 3.5
Med-Education 3.0 0.5 -1.7 0.8
High-Education 4.1 4.1 -1.6 4.1
Rural 1.1 -0.3 -1.7 -0.35
Female Headed hh 0.8 -0.3 -1.7 1.6
Employee 1.5 0.0 -1.7 -1.6
Self-Employed 0.9 -0.5 -1.7 -1.5
Other 2.0 0.7 -1.8 -0.7
Employer 5.2 1.8 -1.7 1.7
Total 1.9 0.5 1.7 0.34
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Poverty and Welfare
HouseholdHead
CountPoverty
Gap SeverityWelfare
(EV)1 Welfare
(EV)2
No-Education 3.7 5.6 6.9 -0.01 -0.03
Low-Education -11.8 -11.1 -12.5 0.03 -0.03
Med-Education -1.5 -1.2 -3.6 0.01 -0.02
High-Education -14.0 -13.8 -13.3 0.03 0
Urban households -3.6 -2.6 -2.5 0.01 -0.037
Employee Male 3.0 6.2 7.7 -0.01 -0.02
Female-Headed -3.3 -5.6 -5.9 0.02 -0.05
Self-Employed 2.8 5.2 5.6 -0.01 -0.04
Other 1.7 2.2 7.1 -0.01 -0.03
Employer -3.5 -5.4 -8.3 0 0
Rural households 2.3 4.5 5.7 -0.004 -0.036
Total -0.3 1.3 2.0 0.004 -0.037
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continued
Relative Poverty-Change in Gender Composition in Poor Household
NoED
LowED
MedED
HighED
Urban
Empee FH
S-Emp oth
Empyer Rur Pak
Men -0.11 -0.99 0.03 0 -0.08 0 0.08 -0.03 -0.07 0 0.02 -0.03
Women 0.11 0.99 -0.03 0 0.08 0 -0.08 0.03 0.07 0 -0.02 0.03
Capability Poverty Indicators
M-IMR 0.7 -0.2 -0.06 -0.23 -0.08 0.07 -0.11 0.07 0.02 -0.1 0.04 0.01
F-IMR 0.7 -0.2 -0.06 -0.24 -0.05 0.07 -0.11 0.07 0.02 -0.1 0.05 0.03
M-LR -0.6 0.24 0.04 0.02 -0.2 -0.92 0.49 -0.3 -0.04 0.15 -0.37 -0.29
F-LR -0.92 0.95 0.17 0.08 -0.33 -3.33 1.57 -1.12 -0.1 0.59 -1.69 -1.11
Leisure—Relative Time Poverty
Men -0.7 6.4 1.7 3.8 1.87 -1.7 4.8 -1.3 -1.4 1.7 -1.49 0.15
Women -1.3 6.3 1.2 4.3 1.74 -1.9 4.8 -1.5 -1.5 0.6 -1.68 -0.09
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Conclusion• Revenue Neutral Trade Liberalization • benefit more to women by increasing
•Market Employment of unskilled worker •Wage income of women more than menHarmful as •Division of labor remains unequal and
Women becomes more time poorTrade Liberalization, Poverty and Welfare
•Head Count Ratio Reduces at the national level increases in rural, decreases in urban area
– Trade Liberalization and Welfare •Welfare improves when measured at
consumption level of market goods•Deteriorate- with reduction in consumption
of market and non market goods
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ConclusionTL and Poor
– Increase Work Load on women relative to Men– Deteriorate capabilities—FLR > MLR– Increase income poverty among women relative to men– Increase time poverty by reducing leisure time– Welfare improves - Consumption of market goods only– Welfare deteriorate - consumption of both market and
non-market goods
TL and Rich
– TL is Gender Neutral for Rich Households – Remittances neutralize negative effects of trade
liberalization– Welfare Improves with consumption of market goods– Welfare does not change with total consumption (market and non market goods)—work load increases and leisure reduces)
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Policy Implications
• Complementary Policies
• Reduce Tax on basic need
• Transfer payments
• Poverty Targeted Program
• Public Investment in Social Sector
• Migration – Remittance
• Household Responsibility must be share by men
37