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

2. 2 Outline Introduction Methodology – Gender Sensitive CGE Data - Gender Sensitive SAM Simulation Results Conclusion

3. 3 Introduction Gender Inequalities in Pakistan w omen 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. 4 cont…. Bias in Intrahousehold Allocation of Resources Bias in Division of Labour Constraints Men and Women Face Differ

5. 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. 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. 7 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

8. 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. 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. 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. 11 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

12. 12

13. 13 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% 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 %

14. 14 Time allocation by Gender in Market Economy Male Labour in hoursFemale labour in hours SectorsNo- Education Low- Education Med- Educatio n High- Educatio n No Education Low Education Med- Educatio n High Educatio n Crop* 39.521.321.87.966.255.551.90.0 Live Stock 11.56.55.91.810.011.26.50.0 Textile 6.36.57.93.99.518.619.727.0 Machinery 1.84.33.42.00.0 0.5 Public Administra tion** 8.013.216.831.54.30.00.313.3 Education and Health** 1.42.34.313.51.30.00.926.7

15. 15 y

16. 16 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 %

17. 17 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

18. 18 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 where af + am =1

19. 19 Intra Households Allocation of Resources 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

20. 20 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

21. 21 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

22. 22 Consumption of Market and Non-Market Goods Maximizing Stone-Geary utility function S.t Income constraint Time constraint

23. 23 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.

24. 24 Closure l CAB and Nominal exchange rate are constant and real exchange rate adjust to keep the balance. l Government consumption and Investment are kept fixed in real term for welfare and poverty analysis. l Savings equal Investment

25. 25 Poverty and Welfare Analysis A. Capability Poverty Indicators- 1. IMR—Measure satisfaction of at least 4 basic needs 2. LR—Education

26. 26 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

27. 27 Simulation: Revenue Neutral Trade Liberalization Tariff Reduction Sales tax increases

28. 28 Variation in Macro Aggregates SectorsM/QE/Xs Trade Liberalization PCPMQDMEVA Agriculture3.51.05-1.32-2.45-0.21-0.271.473.5-0.23 Industry26.815.2-4.01-8.480.03-1.183.414.34-0.19 Textile3.842-2.2-5.41.21.04.74.62.6 Machinery61.53.5-8-9.51.2-2.43.56-2.1 Services4.96.1-1.80.66-0.39-0.08-2.982.22-0.19

29. 29 Factor Market Effects Market Sectors Female LabourMale Labour NoLowMedHigh Total NoLow Mediu mHigh Total Total Lab Edu Agriculture0.2-1.9-2.50-1.120.91-2.4-0.66-4.57-0.1-0.42 Textile74.74.21.84.347.94.56.42.46.125.3 Chemicals-6.10-9.2-10.7-9.21-5.4-8.1-7.2-10.2-8.54-8.6 Non-Metallic-6.3000-6.28-5.5-8.2-7.7-10.4-6.39-6.4 Metallic00000-8.6-11.2-10.7-13.3-11.62-11.7 Industry6.244.651.72-0.682.171.04-1.91-0.43-5.64-1.21-0.41 Services-4-1.7-3.5-2.663.90.91.5-1.5-0.31-0.54 Total0.84-0.99-1.62-2.34-0.73-1.2-4.2-2.6-6.2-0.4-0.47

30. 30 Labor to Non Market Activities Household Social Reproduction Leisure Urban households0.481.8 No-Education-1.5-0.8 Low-Education46.4 Med-Education0.31.6 High-Education33.9 Rural households-0.45-1.4 Employee Male-1.6-1.8 Female-Headed2.84.8 Self-Employed-1.1-1.4 Other-1.2-1.5 Employer-0.81.2 Total-0.020.16

31. 31 Variation in Wage Income, Expenditure and CPI Household Women wage Income Men Wage IncomeCPI Household Expenditure Urban 2.71.3-1.61.06 No-Education 1.3-1.2-1.6-1.7 Low-Education 2.60.9-1.63.5 Med-Education 3.00.5-1.70.8 High-Education 4.1 -1.64.1 Rural 1.1-0.3-1.7-0.35 Female Headed hh0.8-0.3-1.71.6 Employee1.50.0-1.7-1.6 Self-Employed 0.9-0.5-1.7-1.5 Other 2.00.7-1.8-0.7 Employer 5.21.8-1.71.7 Total 1.90.51.70.34

32. 32 Poverty and Welfare Household Head Count Poverty GapSeverity Welfare (EV)1 Welfare (EV)2 No-Education 3.75.66.9-0.01-0.03 Low-Education -11.8-11.1-12.50.03-0.03 Med-Education -1.5-1.2-3.60.01-0.02 High-Education -14.0-13.8-13.30.030 Urban households -3.6-2.6-2.50.01-0.037 Employee Male 3.06.27.7-0.01-0.02 Female-Headed -3.3-5.6-5.90.02-0.05 Self-Employed 2.85.25.6-0.01-0.04 Other 1.72.27.1-0.01-0.03 Employer -3.5-5.4-8.300 Rural households 2.34.55.7-0.004-0.036 Total -0.31.32.00.004-0.037

33. 33 continued Relative Poverty-Change in Gender Composition in Poor Household No ED Low ED Med ED High ED Urb an Emp eeFH S- Empoth Emp yerRurPak Men-0.11-0.990.030-0.0800.08-0.03-0.0700.02-0.03 Women0.110.99-0.0300.080-0.080.030.070-0.020.03 Capability Poverty Indicators M-IMR0.7-0.2-0.06-0.23-0.080.07-0.110.070.02-0.10.040.01 F-IMR0.7-0.2-0.06-0.24-0.05 0.07 -0.110.070.02-0.10.05 0.03 M-LR-0.60.240.040.02-0.2-0.920.49-0.3-0.040.15-0.37-0.29 F-LR-0.920.950.170.08-0.33-3.331.57-1.12-0.10.59-1.69-1.11 Leisure—Relative Time Poverty Men-0.76.41.73.81.87-1.74.8-1.3-1.41.7-1.490.15 Women-1.36.31.24.31.74-1.94.8-1.5 0.6-1.68-0.09

34. 34 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

35. 35 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)

36. 36 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. 37