Does offshoring raise female employment in a developing country? Evidence from Indonesian manufacturing plants

Abstract

We investigate the effects of offshoring on female employment in a developing country as a recipient. We utilise unique data on outsourcing revenues from Indonesia's manufacturing plants. After correcting for offshoring's endogeneity through an instrument variable, we find substantial positive effects on the share of female workers, primarily driven by the increase in female workers without adversely affecting male employment. These positive effects are evident in production occupations but not in non‐production ones. Furthermore, these effects are more pronounced in industries with a sizeable low‐educated workforce, low‐technology sectors or light industries. Finally, we find that international outsourcing, rather than domestic outsourcing, is the key factor for female employment.