An analysis of female labour supply and earnings in small islamic country: evidence from Brunei Darussalam

Teo, Siew Yea. (2004). An analysis of female labour supply and earnings in small islamic country: evidence from Brunei Darussalam PhD Thesis, School of Economics, The University of Queensland.

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Author Teo, Siew Yea.
Thesis Title An analysis of female labour supply and earnings in small islamic country: evidence from Brunei Darussalam
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2004
Thesis type PhD Thesis
Supervisor Dr. Gareth Leeves
Dr Philip Bodman
Total pages 350
Collection year 2004
Language eng
Subjects L
340207 Labour Economics
720499 Management and productivity issues not elsewhere classified
Formatted abstract This thesis is the first investigation of female labour market in Brunei. It seeks to investigate and provide a depiction of female labour market outcomes in terms of their earnings, wage discrimination, participation and occupational segregation. It hopes to broaden current knowledge by offering a comprehensive account of female labour force involvement and intends to highlight how the results can contribute to the design and implementation of appropriate policies and structural adjustments in Brunei. It is also of interest as it adds to the limited research that has been conducted into female outcomes in labour markets of Islamic countries.

Brunei's current development strategy is to expand service sectors such as infocommunication, tourism and halal food industries. These are labour intensive sectors that will utilise female employment, especially as the Government is trying to reduce the country's heavy reliance on foreign expatriates. Females over the age of 25 are the largest pool of potential labour which can be mobilised to meet the present human resources requirements of the country. Moreover, a young population will contribute to large increase in female labour supply. Hence, it is important to understand the constraints and challenges that will face planners. The results are compared to other developing and Islamic countries where appropriate.

This thesis applies econometric models to data that reflects Brunei's economic, socio-cultural and political setting. Among the methodologies employed are the Oaxaca (1973) decomposition method for the analysis on gender wage differentials; Heckman (1979) two-step estimations; two-stage probit model to examine fertility decisions (Angrist and Evans, 1998); bivariate probit estimations to assess the educational attainment of females, mixed (discrete choice and multinomial logit) model of occupational choice (Johnes, 1999) and the Brown et al. (1980) decomposition that incorporates occupational attainment in studies of male-female wage differentials.

The earning disparities between males and females and the distribution of earnings within population with respect to gender are examined. Male-female differences in earnings are investigated within the context of ‘endowment' and 'discrimination'. The results show that part of the gender wage gap is attributable to productivity related factors (approximately 36 percent) such as females' lower investment in vocational and technical training, and their interrupted participation in the labour force. Yet an unexplained residual (discrimination) remains even after accounting for these factors which is in the order of approximately 64 percent.

Female labour market participation is found to be influenced by a range of characteristics such as racial background, nationality, labour market experience, sector of employment, the presence of younger children, the availability of domestic help. The endogeneity of predicted wages in the participation decision made by married females is investigated. Predicted wages have a positive and significant effect on participation. The market signals women receive in terms of earnings they expect to receive from working appear to be strong factor influencing participation and career choice, as in developed countries.

The findings on the distributional effects of employment structure show that although the within-occupation wage differences still dominate the overall gender wage gap, the across-occupation component of the gender wage differential is substantial. Almost one third of the unexplained component is attributed to across-occupation differences; the effect of occupational segregation. This differs from results in developed countries and developing countries with more free market systems. The segmentation of occupational categories on the basis of an employee's gender appears to be an important labour market phenomenon deserving greater attention for those concerned about equality and efficiency.

Family background affects females' human capital investment. A mother's educational attainment influences the daughters' education level. This will affect their earnings as earlier results found that educational attainment increases earnings. Moreover, OLS estimations were found to underestimate return to education for single females, and overestimate the return to married females. This misleading market signal could affect female educational attainment and labour supply decisions. Single females may not invest in education and training sufficiently, and more married females may want to work because of higher potential wage, and there could be allocative inefficiency with this source of local human capital.

The empirical evidence on fertility decisions show that females with higher education, and married to a husband who has higher educational attainment are more likely to have smaller families. Surprisingly, females in urban areas are more likely to have more children, which may reflect the dominant effect of public sector employment in these areas and the benefits it conveys. However, there seems to be no son effect (desire to have a male child) as in some other Asian societies, the gender of the firstborn had no impact on fertility decision.

If policy makers seek to optimise labour market efficiency and make most efficient use of resources, they must tap into the resources of female employees in order not to lose their potential productivity and the resources invested in them. This is also in line with the "Bruneianisation" Policy to reduce the heavy reliance of expatriate workers. The main argument advanced through the results from this thesis is that equal opportunity policies that focus solely on improving individual endowments alone will have limited impact in improving women's position unless they are accompanied by initiatives assisting the (a) occupational choice of females and (b) assistance to females who face barriers to participation (related to family circumstances).
Keyword Labor supply -- Brunei
Women -- Employment -- Brunei

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Created: Fri, 24 Aug 2007, 18:38:55 EST