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1
I. INTRODUCTION
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2 Pakistan Economic and Social Review
those having same level of education and skills, easier access to credit and
equal access to inputs. Females are a major source of new labour and can
increase growth by reducing the impact of shrinking labour force in aging
economies (IMF Staff Discussion Note, 2013). Although several efforts have
been made to promote gender equality in the labour market, yet average
Female Labour Force Participation Rate (FLFPR) remained low (40%)
across the world.1 Further, gendered base labour force participation gap is
severe in South Asia with low FLFPR (31.8%) in comparison to male LFPR
(81.3%) (ILO, 2013).
Since 1980s, globalization has decreased transportation costs, increased
transmission of knowledge, elevated trade, and promoted FDI inflows and
technology transfer. Globalization is one of the important macroeconomic
indicators, which has created tremendous impact on gendered labour market
indicators in developing nations. According to World Development Report
(2012), globalization has increased relative FLFP and wage level.
TABLE 1
Indicators
Indicators Both
Both Males Females
Underemployment
Underemployment (worked
(workedless
lessthan
than 1.6 1.2 3.1
35 hours
hours aa week)
week) Rate
Rate(%)
(%)
Mean hours worked 46.4 50.1 33.3
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JAFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 3
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4 Pakistan Economic and Social Review
(2012) have found that FDI and trade both negatively affect FLFP in
developing nations and positively in developed nations. Rasekhi and
Hosseinmardi (2012) conclude that globalization has reduced gap in gender
wages for developing countries.
Only few studies have been conducted for Pakistan assessing the impact
of globalization on gender equality in the labour market. Hyder and Behrman
(2012) have investigated whether TO affects gender differences in LFP in
different occupational categories in Pakistan using census data. The study
finds that trade decreases LFP gap between male and female workers in all
occupations. Siddique (2009) investigated the gender dimensions of the
impact of trade liberalization in Pakistan using computable general
equilibrium model. The model distinguishes females from males in all four
skill categories and state that revenue-neutral trade liberalization in Pakistan
has increased employment of females in unskilled jobs and increased their
real wages greater than males in all categories of labour. Contrarily, Mujahid
(2013) finds negative correlation between global indicators (trade openness
and FDI) and female labour force participation rates. Trade openness and
FDI are inversely related with female labour supply. The impact of trade
openness on female labour supply is negative that may be due to high
demand for skilled labour which is captured by skilled labour force.
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JAFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 5
Model 1
FDI may affect LFPRD in both ways. FDI in export oriented firms
increase demand for labour. Thus, producers find it less costly to hire female
employees as they are low wage earners. This would lead to reducing
LFPRD (Seguino, 2000). Technology based FDI in services sector may
benefit male computer and soft engineers as compared to females as they are
more educated and skilled as a result it widens LFPRD (Oostendrop, 2009).
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6 Pakistan Economic and Social Review
Model 2
Note: The asterisks *** show that probability is less than 0.01.
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JAFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 7
alfprd = ra+rufdùJ.Frwl_l+r2,fIAFDi,_,+r,l'ZAPa,_l
I-1 1=0 i=0
+
1=0 1=0
r„t,A
+ rJFR.-i + r9pci,
Null hypothesis:
Model
Model Estimated
Estimated
(LFPRD)
(LFPRD)
F-Statistics
F-Statistics 5.5108**
03
Selected
Selected LagLag
Length
Length (Criteria)
(Criteria) (AIC)
Critical values from Pesaran et al. (2001), Table CV (v)
Critical bound
Lower Upper
values
1% 5.17 6.36
5% 4.01 5.07
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8 Pakistan Economic and Social Review
Dependent Dep
Variable: LFPRD
Variable Variab
CoefficientCoef
T-statistic T-s
Prob
LFPRD{-1)
LFPRD(-I) 0.2329 1.439 0.1663
LFPRD{-2)
LFPRD(-2) -0.0635 -0.398 0.6947
LFPRD(-3) -0.5519***
-0.5519*** -3.434
-3.434 0.0028
FDl
FDÎ 0.3609*** 2.009 0.0589
PCI(r2)
***
PCI{-2) -0.0091
-0.0091*** -4.250 0.0004
TO -0.2392***
-0.2392*** -3.158 0.0052
DUMl
DUM1995
995 2.1018*** 4.028 0.0007
Rl
R1 0.9922
ADJ R1 0.9886
F-statistic
F-statistic 271.39
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JAFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 9
TABLE 5
Dependent
Dependent Variable:
Variable:
DLFPRD
DLFPRD
Variable
Variable
Coefficient
Coefficient t-statistic Prob
DLFPRD(-1)
DLFPRD{-1) 0.0962 0.463 0.6496
DLFPRD{-2)
DLFPRD{- 2) 0.0014 0.008 0.9936
DLFPRD(r
DLFPRD{-3)3) 0.2253 1.161 0.2625
DTO(-1)
DTO(-1) 0.0755 0.509 0.6172
DTO{-2)
DTO(-2) 0.1608 1.1627 0.2620
ECM(-1)
ECMir 1) -0.9707 -2.0309 0.0592
Rl 0.5812
ADJ Rz 0.2934
F-statistic 2.019
Similar results are found by Siddique (2009), Gaddis and Pieters (2012)
and Ahmad (2007). The coefficient of FDI is found positive and shows that
1% increase in FDI leads to 0.36% increase in LFPRD. These results are
similar to the findings of Oostendrop (2009), he stated that technology based
FDI in services sector might benefit male computer and software engineers
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10 Pakistan Economic and Social Review
In the next step, Error Correction Model (ECM) has been estimated as
follows:
+r„'ZDTFR
I»0 1=0
+ y-j ECMlA +
The coefficient
convergence to equi
from the long-term
TABLE 6
At level
For Model 2 Table 7 shows that all variables are stationary at level
including dependent variables. As all the variables are 1(0), thus fulfilling the
prerequisite for applying OLS technique.
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JAFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 11
TABLE 7
Dependent Variable: WR
Variable
Coefficient T-statistic Prob
TOI
TO 1 -0.2845 -0.469 0.6432
Rz 0.8284
ADJ R1 0.7855
F-statistic 19.3121
Prob. Serial
0.1894
Correlation LM test
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12 Pakistan Economic and Social Review
increase in wage gap (Seguino, 2000). In case of Pakistan, since last two
decades almost 70 percent FDI came in services sector (Hafeez et al., 201
and comparatively there is large number of skilled males in contrast to
females so, gendered base wage gap widens with the advent of time.
CUSUM 5% Significance
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JAFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 13
IV. CONCLUSION
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14 Pakistan Economic and Social Review
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J AFFRI et al. : Impact of Globalization on Gender Inequality in Pakistan 15
REFERENCES
Berik, G., Y. van der Meulen Rodgers and J. E. Zveglich (2003), Inter
and wage discrimination: Evidence from East Asia. World B
Paper Series WPS3 111.
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16 Pakistan Economic and Social Review
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