Should policymakers worry about a declining female labor force participation rate?
Spotlight on: International Women's Day
By Sher Verick
Despite growing at around 8% in the 2000s, the female labor force participation rate in India tumbled down from 37.3% in 2004–2005 to 27.2% in 2011–2012. This puzzling outcome baffled both policymakers and academics. Should such a decline be a concern?
Some commentators argue that a decrease in the female labor force participation rate is an expected outcome of the development process: as a country becomes richer, women withdraw from the drudgery of agriculture and other subsistence jobs. Only when the economy advances further will women re-join the labor force (e.g. in service sector jobs).
However, empirical evidence suggests that such a U-shaped relationship between a country’s level of development and female labor force participation is not robust. Many countries do not follow this pattern. The decline in India was from a low starting point, well below the global average for a low- to middle-income country, which reflected social norms that historically restricted women’s engagement in work outside the home. In contrast, Bangladesh, a low-income economy with similar historical norms, witnessed strong growth in female labor force participation during the 2000s, in line with the rapid expansion of the garment sector.
Therefore, although the female labor force participation rate tells us something about the process of structural transformation and development in a given country, paths vary considerably across different labor markets due to the interaction of complex economic and social factors, which are not easily captured in a simple model.
How do women fare compared to men? According to the ILO, the global labor force participation rate for women was just 49% in 2017, 27 percentage points lower than for men. The gender gap is the widest in the Arab states, Northern Africa, and Southern Asia, where it exceeds 50 points.
Beyond the binary indicator of labor force participation, it is important to make a distinction between the quantity and quality of employment. For instance, high participation rates in low-income countries are accompanied by women’s overrepresentation in unpaid household activities and low-productivity work. Gender wage gaps persist in most countries. Such discrimination in the workplace acts as a disincentive to participate in the first place.
What matters, ultimately, is the opportunity and choice women have to work outside the home and their ability to access decent and productive employment. To work toward this goal, policymakers need to consider various dimensions, cutting across different realms of government policy: job creation and sectoral strategies; skills and education; reducing women’s time burden; improving transport and infrastructure; and strengthening their legal rights and protection. Better measurement of women’s paid and unpaid work is also crucial.
Policymakers should worry about gender disparities in female labor force participation rates, not just a declining trend. More importantly, they need to consider different employment dimensions, which tell a lot more about the quality of jobs women are able to access and the barriers they face.
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Gender differences in wages and leadership
Gender wage gaps and women’s underrepresentation in leadership positions exist at remarkably similar magnitudes across countries at all levels of income per capita. Women’s educational attainment and labor market participation have improved, but this has been insufficient to close the gaps.
Overall female labor force participation rates have been improving across the globe. However gaps in employment and gender are still large. What does female labor force participation look like in different countries?
In low-income countries a typical woman’s work history is a patchwork of informal sector work; periods out of the labor market for child birth, then childcare, and then, later, elderly parent care; working fewer than 40 hours per week while trying to juggle these responsibilities; and working at or close to home. The work is also typically low paid, with social norms and discrimination restricting women’s access to more desirable work. Women also face barriers in accessing finance, which limits their ability to develop their own businesses. On top of all this, women tend to live longer than their spouses and so face an uncertain economic future in widowhood. Read the full opinion piece.
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