Elsevier

Economics & Human Biology

Volume 16, January 2015, Pages 1-15
Economics & Human Biology

The height premium in Indonesia

https://doi.org/10.1016/j.ehb.2013.12.011Get rights and content

Highlights

  • An additional 10 cm in physical stature is associated with a 8% and 13% earnings increase for men and women, respectively.

  • Workers’ productivity does not fully explain the height premium.

  • We provide evidence that is suggestive of discrimination based on customers’ preferences for tallness.

Abstract

Analyzing the Indonesian Family Life Survey for the year 2007, this paper estimates that a 10 cm increase in physical stature is associated with an increase in earnings of 7.5% for men and 13.0% for women, even after controlling for an extensive set of productivity variables. When the height premium is estimated by sector, it is 12.3% for self-employed men and 18.0% for self-employed women; a height premium of 11.1% is also estimated for women in the private sector. In the public sector, however, the height premium estimate is not statistically significant for either men or women. This paper provides further evidence of discrimination based on customers’ preferences for tall workers.

Introduction

The traditional Mincerian earnings equation estimates the relationship between earnings and human capital such as schooling, work experience, and tenure. Since its introduction, the equation has been expanded to include physical appearance, typically including variables for beauty, weight, and height (see references in Hübler, 2009). Of the different physical appearance measures, height stands out in the literature because it is easy to measure, widely available, and (when measured rather than self-reported as in our dataset) objective. More important, although genetic factors largely determine the variation in height among individuals within a population at a point in time, there is enough room for the pre-adulthood environment to influence height. Therefore, height is also a reflection of an individual's growth environment. As explained in Section 3, given a person's genetic factors, an environment that has sufficient nutrition and is free of diseases and extreme weather conditions increases his or her height. At the same time, the environment also affects human capital and labor market outcomes. Hence, it is not surprising that, relative to short people, tall people are healthier, stronger, smarter, more educated, more sociable, more liked, and more confident. As a result, they tend to be richer, more influential, more likely to be married, more fertile, happier, and longer-lived (see references in Mueller and Mazur, 2001, Carrieri and De Paola, 2012).

The relationship between height and earnings is generally positive, and its size is referred to as the height premium. As discussed in the next section, the premium has been estimated for some developed and developing countries, but so far, not for Indonesia. Indonesia is of great interest because it is the fourth most populous country in the world, leading Southeast Asia and Islamic countries. It is unfortunate that little light has been shed on such a large population. In addition, little is known about the height premium in Islamic countries in general. Almond and Mazumder (2011) demonstrated that prenatal exposure to Ramadan resulted in lower birth weights. Given the important implications of low birth weight for human capital and labor market outcomes, the Indonesian case can offer interesting insights into the height premium in similar countries. More important, the Indonesian economy has grown rapidly since its independence, and economic growth has not been impeded by the global financial crisis: since 2007, its GDP growth rate has never fallen below 6%, except in 2009, when it was 4.6%. It is also notable that the Indonesian GDP is the largest of the ASEAN members.1 Another interesting fact about Indonesia is that it belongs to a region which exhibited the shortest statures in the world for the entire period of 1810–1989 (Baten and Blum, 2012). Hence, while the fast growing economy still depends on physical strength at work and demands tall (i.e., strong) workers, tallness is a scarce resource in Indonesia. This situation provides for an interesting case study on the height premium in Indonesia. Our results show that, unconditional on covariates, an additional 10 cm in height is associated with a 35.8% increase in earnings for men and a 44.4% increase for women. Conditional on an extensive set of covariates, the corresponding figures decrease to 7.5% and 13.0%, respectively, but the magnitudes remain substantial. They are greater than the return on additional year of schooling. In addition, these figures are generally higher than those of developed countries, indicating that greater value is attached to height in Indonesia.

When the height premium is estimated for some developing countries, reasons for the premium are rarely discussed. However, recent studies have attempted to explain the height premium in the US, the UK, and Sweden based on workers’ productivity (Persico et al., 2004, Case and Paxson, 2008, Lundborg et al., 2014); this paper follows this line of research. Our data provide rich information on individual and job characteristics, so it is possible to estimate the extent to which productivity explains the height premium in Indonesia. The results suggest that although productivity factors contribute to earnings to some extent (mostly owing to weight and schooling), they are not the main channels through which height increases earnings. When productivity factors fail to entirely account for the height premium, discrimination is usually considered. Employing the estimation strategies provided by the literature on the beauty premium, we put forth evidence that is suggestive of discrimination arising from customers’ preferences for tallness.

Section snippets

Literature review

Research on height premiums using historical and contemporary data has been growing quickly. Steckel (1995) provided an excellent review of such research, and Steckel (2009) subsequently updated this review. Because of the substantial extent of the literature, this section attempts to cover countries from a range of incomes. Attention is also paid to trends in empirical methods and research questions.

Thomas and Strauss (1997) examined the relationship between health and wages in urban Brazil.

Conceptual framework

The literature provides ample evidence that childhood conditions such as nutrition, disease, and temperature influence height, cognitive and noncognitive skills, and physical capacity. Studies that have investigated the reasons for the height premium have typically relied on this evidence. In this section, we provide a simple set-up under no uncertainty for our estimation strategies. This framework is similar to those considered by Persico et al. (2004), Case and Paxson (2008), Vogl (2014), and

Data and methods

This paper analyzes the Indonesian Family Life Survey (IFLS), an on-going longitudinal survey.2 In 1993 (IFLS1), the survey started following more than 22,200 individuals in 7224 households in 13 of the 26 Indonesian provinces; the sample is representative of 83% of the Indonesian population. After that, four follow-ups were carried out in 1997 (IFLS2), 1998 (IFLS2+), 2000 (IFLS3), and 2007 (IFLS4). Although the survey

Descriptive statistics

Descriptive statistics are provided in Table A.1 in the appendix. Because many variables are used in this paper, only some variables of interest are briefly explained in this subsection. The male and female mean heights are 162.4 cm and 151.2 cm, respectively. Their small statures are consistent with the low level of economic development. The small statures are also consistent with the historical trend that South and Southeast Asians were the shortest in the world for the period 1810–1989 (Baten

Conclusions

Since Hamermesh and Biddle's (1994) seminal paper, studies on premiums attached to physical appearance have grown fast in the context of the Mincerian earnings equation. Among many features of physical appearance, height has garnered much attention because it is a relatively good measure of an individual's growth environment. Once genetic factors are taken into account, tall people are more productive and consequently earn more. The positive relationship between height and earnings has been

Acknowledgements

I would like to thank Ki Seong Park, John Komlos, and 6 anonymous reviewers for their helpful comments.

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