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Modeling Gender Effects of Pakistan’s Trade Liberalization

Rizwana Siddiqui Pakistan Institute of Development Economics. Modeling Gender Effects of Pakistan’s Trade Liberalization. Perspectives on Impact evaluation Cairo Conference, Egypt March 31, 2009. Outline. Introduction Methodology – Gender Sensitive CGE Data - Gender Sensitive SAM

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Modeling Gender Effects of Pakistan’s Trade Liberalization

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  1. Rizwana Siddiqui Pakistan Institute of Development Economics Modeling Gender Effects of Pakistan’s Trade Liberalization Perspectives on Impact evaluation Cairo Conference, Egypt March 31, 2009

  2. 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. Objective The 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

  7. Development of Gender Aware CGE • Production – Integrate market and non-market sectors • Labour by gender • Rigidities • Consumption by Gender • Poverty Indicators by Gender

  8. DATA Construction of Gender SAM • Traditional SAM-based on market economy • Integration of Market Economy and Household Economy • Female Participation Adjusted with new data • SNA Classification is used to Categorize market, household, and leisure • Evaluation of Non Market Work—Opportunity cost of labor

  9. Assumptions All 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

  10. 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.

  11. Salient Features of Gender SAM • It makes invisibility of women's household work visible. • Hidden market work: Improved female participation- female participation in the market is over 50 % instead of 12% • Female labour increases from 3.1 million (OLD) to about 15 million

  12. 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% Men Urban 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 % Time Allocation between market and non market activities

  13. Time allocation by Gender in Market Economy

  14. y

  15. 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 %

  16. 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

  17. Intra Households Allocation of Resources Using Following Ratio Household Consumption Disaggregated by gender where af + am =1 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.

  18. Urban Crop-(Vegetables, and cereals) –ALL HH-W Live stock & poultry-all hh Men Cloth- Poor- Men Rich-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 Intra Households Allocation of Resources

  19. CGE Model Production - 3 Market sectors—Twenty Households Social Reproduction—Nine Leisure—Nine Labor by gender and by education level Men-(4)—No education, below primary, 5-9 years, Ed>10 Women-(4)—No education, below primary, 5-9 metric, above Consumption of Men Women

  20. 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

  21. Consumption of Market and Non-Market Goods Maximizing Stone-Geary utility function • S.t • Income constraint • Time constraint

  22. 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.

  23. 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

  24. Poverty and Welfare Analysis A. Capability Poverty Indicators- • 1. IMR—Measure satisfaction of at least 4 basic needs • 2. LR—Education

  25. 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

  26. Simulation: Revenue Neutral Trade Liberalization • Tariff Reduction • Sales tax increases

  27. Variation in Macro Aggregates

  28. Factor Market Effects

  29. Labor to Non Market Activities

  30. Variation in Wage Income, Expenditure and CPI

  31. Poverty and Welfare

  32. continued

  33. Conclusion • Revenue Neutral Trade Liberalization • benefit more to women by increasing • Market Employment of unskilled worker • Wage income of women more than men Harmful as • Division of labor remains unequal and Women becomes more time poor Trade 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

  34. Conclusion TL 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)

  35. 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

  36. Thank You

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