Wednesday, 27 August 2014

Even sweatshop jobs can be good for you,

especially if you are female.

A new NBER working paper looks at Manufacturing Growth and the Lives of Bangladeshi Women. The paper is by Rachel Heath and A. Mushfiq Mobarak.

Heath and Mobarak note that there is very little rigorous analysis of the welfare effects of access to factory jobs - "sweatshop jobs" - for women, and the "evidence" that there is is dominated by anecdotes from anti-sweatshop activists about the negative effects of hazardous working conditions. The evidence gap is especially pertinent for policymaking in Bangladesh, where well-publicized garment factory collapses and fires and their attendant death tolls recently captured the world’s attention. In response to the disasters individual large buyers, in addition to the U.S. government, have made moves to restrict or boycott garment exports from Bangladesh but such export restrictions and boycotts come with the potential to hurt the very workers that they are designed to protect.

The manufacturing industry in Bangladesh currently employs almost 4 million workers and it was the first industry to provide employment opportunities to women on a large-scale in a country where women traditionally have not worked outside the home. In doing so to it has raised the opportunity cost of being married and having children. These sweatshop jobs require a basic level of literacy and numeracy skills and the arrival of garment factories therefore has potentially affected enrollment, employment, marriage and childbearing decisions for Bangladeshi women.

Heath and Mobarak's
[...] results suggest that the rise of the garment industry can help explain the declining fertility, increasing age at marriage, and rapid increase in girls' educational attainment during this period, both in absolute terms and relative to boys [...]. Approximately 80 percent of garment factory workers in Bangladesh are female [...] and extrapolation from our data and national surveys suggest that around fifteen percent of women nationwide between the ages of 16 and 30 work in the garment industry. The education results are particularly policy- relevant, as Bangladesh has surpassed the third Millennium Development Goal of gender equity in enrollments, a goal with which many other countries in Western Asia and sub-Saharan Africa continue to struggle. Our research design permits a study of investments in girls relative to boys, which is of considerable policy [...] and also academic interest, given the comparative advantage girls possess in skilled tasks [...]. Our results provide one hitherto unexplored explanation for the accelerated gender equity in education in Bangladesh, thus generating important policy implications for other developing countries interested in emulating Bangladesh's success.
There are, in theory, a number of different ways that access to factory jobs can alter women’s school, work, marriage and childbearing decisions.
As documented for maquiladora jobs in Mexico, older children may be induced to drop out of school to access the factory jobs [...]. Conversely, younger children (who are still too young for the factory jobs and do not face the temptation to drop out and begin earning immediately) may respond by investing in education if the availability of relatively well-paid manufacturing jobs increase the returns to education. Educational attainment might also increase through a wealth effect, if parents can now better afford to send their children to school. Both the increased enrollment channel and the direct factory employment effects would result in girls delaying marriage and childbirth.
Heath and Mobarak
[...] document that the hazard of marriage and childbirth at early ages (12-18) drops sharply for girls when they gained exposure to the ready- made garment sector. This is important because other research has documented large negative welfare implications of early marriage and early childbirth [...].
Next Heath and Mobark examine the ways by which these delays in marriage and childbirth occur.
Did girls increase their educational attainment in order to obtain well-paying garment jobs which require numeracy and literacy, which then led to a postponement of marriage due to greater educational attainment? We assess the effect of cumulative years of exposure to garment factory jobs on the total years of educational attainment (for those with completed schooling histories), adding an additional comparison to the girls’ male siblings, given that garment production is has been a much larger innovation in the labor market for girls than for boys [...]. We find that girls gain an extra 1.5 years of education relative to their brothers in the median garment-proximate village. This represents a 50% increase in girls’ educational attainment over control villages that do not have a garment factory nearby. We observe the increase in female education (relative to their male siblings) even in families where the mother or older sister never worked in a factory, which suggests that increased demand for skills in factories that offer job opportunities for women is a likely channel through which the enrollment gains are realized, in addition to any family wealth effect or changes in intra-household time allocation from other household members working in garment factories.

We next use retrospective data on the entire history of annual school enrollment decisions for each girl to test whether the effects of the garment industry on schooling are strongest for younger girls. We find that young girls (aged 5-9) are more likely to stay enrolled in school hen factories open close to their village compared to girls in comparison villages in the same sub-district that are not located within commuting distance of factories, relative to earlier years (before the factory opens), and relative to male siblings of the same age.
While there is a positive effect on education for young girls, what about those a bit older?
Our data also indicate that the delays in marriage and childbirth we estimate likely also stem from girls in garments-proximate villages choosing to work in factories when they are about 17-23 years old, instead of getting married (or staying in school). Factory job access has a small negative effect on school enrollment of 17-18 year olds (unlike the positive effect for younger girls). More importantly, girls who are exposed to factory jobs when they are between 10 and 23 years old (which is the critical age group at risk for early marriage in Bangladesh) are 17 percentage points more likely to have done wage work outside the home, and this is a 79% increase over the control group.
In summary,
[...] access to factory jobs significantly lowers the risk of early marriage and childbirth for girls in Bangladesh, and this is due to both the girls postponing marriage to work in factories, and the girls staying in school at earlier ages. We benchmark the magnitude of the effects of the garment industry against the effects of a large-scale (US$15 million per year) conditional cash transfer for schooling intervention run by the Bangladesh government with multilateral donor support. The program has paid for 2 million girls to remain in school, conditional on remaining unmarried. The dramatic improvement in girls' outcomes in Bangladesh in the past 30 years has 5 frequently but casually been attributed to the FSP, but our estimates suggest that the rapid expansion of the garment sector has been a much more important reason for the decreases in earlier marriages and fertility and the closing of the gender enrollment gap in Bangladesh.
While sweatshop jobs are not great jobs, by our standards, they do come with positives for those people in poor countries who can get them. The anti-sweatshop groups should keep this in mind when attacking such forms of employment. Sweatshops are the first step down the road out of poverty.

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