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JOBS WORKING
PAPERIssue No. 56
Promoting Female Labor Force Participation
Svetlana Pimkina and Luciana de la Flor
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PROMOTING FEMALE LABOR FORCE PARTICIPATION
Svetlana Pimkina and Luciana de la Flor
The publication of this report has been made possible through a grant from the Gender Group and
the World Bank’s Jobs Umbrella Trust Fund, which is supported by the Department for International
Development/UK AID, and the Governments of Norway, Germany, Italy, Austria, the Austrian
Development Agency, and the Swedish International Development Cooperation Agency.
_________________________________________________________________________________
2
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ACKNOWLEDGEMENTS
This report was prepared by the World Bank Group’s (WBG) Jobs Group. The principal authors are
Svetlana Pimkina and Luciana de la Flor. Eliana Carranza was Task Team Leader. The team thanks
Beth Zikronah Rosen, Nivedhitha Subramanian for their contribution to the first version of the
report. We also thank Isis Gaddis and Amparo Palacios-Lopez for inputs provided. The report was
prepared under the general direction and ongoing support of David Robalino, Alvaro Gonzales,
Jennifer N. Jossell, Sonia Madhvani, Fareeba Mahmood, and Siv Tokle.
The publication of this report has been made possible through a grant from the Gender Group and
the World Bank’s Jobs Umbrella Trust Fund, which is supported by the Department for International
Development/UK AID, and the Governments of Norway, Germany, Austria, the Austrian
Development Agency, and the Swedish International Development Cooperation Agency.
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CONTENTS
PROMOTING FEMALE LABOR FORCE PARTICIPATION .....................................................................1
ACKNOWLEDGEMENTS ................................................................................................................ 3
CONTENTS ................................................................................................................................... 4
EXECUTIVE SUMMARY ................................................................................................................. 5
INTRODUCTION ........................................................................................................................... 7
DRIVERS OF FEMALE LABOR FORCE PARTICIPATION .................................................................... 10
1. ENDOWNMENTS...................................................................................................................... 11
1.1. TIME ............................................................................................................................................. 11
1.2. SKILLS & EDUCATION ....................................................................................................................... 17
1.3. FINANCIAL ASSETS ........................................................................................................................... 20
1.4. NETWORKS & SOCIAL CAPITAL .......................................................................................................... 22
2. INTERNAL CONSTRAINTS ........................................................................................................... 23
2.1. PERCEPTIONS OF OPPORTUNITIES ....................................................................................................... 23
2.2. ASPIRATIONS & SELF-CONFIDENCE ..................................................................................................... 24
2.3. RESERVATION WAGES ...................................................................................................................... 25
2.4. NORMS ......................................................................................................................................... 26
3. EXTERNAL CONSTRAINTS ........................................................................................................... 29
3.1. INCOME SHOCKS ............................................................................................................................. 30
3.2. LABOR DEMAND ............................................................................................................................. 31
POLICY RECOMMENDATIONS & AREAS FOR FURTHER RESEARCH ................................................ 34
REFERENCES .............................................................................................................................. 38
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EXECUTIVE SUMMARY
Women comprise half of the world’s adults, and therefore potentially half of its labor force. Their
participation in the labor force is essential to achieving gender equality, sustainable economic
growth, and household welfare. Yet, in nearly every country, women’s labor force participation is
significantly lower than men’s (International Labour Organization, 2019). While the available
literature generally focuses on female employment (women who are employed), this paper centers
on female labor force participation (FLFP, women who are either employed or looking for
employment). The distinction is key, in that women’s decision of whether to work is distinct from the
equilibrium outcome of whether they successfully find employment. The former represents the
potential supply of women’s labor able to meet firm labor demand for production, and thus
contribute to GDP.
This paper explores the specific constraints women face to entering and remaining in the labor
force, and how they can be effectively addressed by policymakers. We classify these barriers around
the key drivers of female labor force participation. First, we examine how constraints in
endowments such as time, education, financial and social capital limit women’s participation in the
labor force. Women’s time is split between paid labor, leisure, and domestic production (unpaid
labor) including housework, childcare, and elderly care responsibilities. These multiple claims on
women’s time, prevent many women from participating in the labor force. Notably, women with
children may require or value more flexible work schedules, which is more likely to be found in the
informal economy. In order to alleviate the constraint created by women’s unpaid domestic work, a
wide range of approaches is recommended, from legal access to family planning services, to access
to care and support for informal caregivers.
In addition, women do not always have the relevant skills and work experience for all jobs, and, even
when they do, they may lack a way to signal their qualifications to potential employers. Job training
programs are common policy intervention to address these constraints, but the empirical success of
these programs is mixed and heavily context-dependent. Successful experiences are often driven by
training in soft skills, such as self-esteem and communication. Another way that women can signal
their value to potential employers is through referrals. Yet, the literature indicates that women are
less likely to be referred through their network. Finally, women often lack access to finance,
including bank accounts and savings products. Financial inclusion and access to savings and credit
products can improve women’s incentives to work, and therefore their labor force participation, by
giving women power to make consumption and savings decisions over any potential earnings.
Second, after summing up constraints in endowments, we review evidence on the role of
preferences, aspirations, norms and beliefs of the labor market on FLFP as internal factors.
Perception of the labor market and of the work environment as well as beliefs about the self in
relation to the labor market may influence women’s decision to participate. Research suggests that
women are more likely to underestimate their skills and are less confident in their ability to obtain a
job, which constraints their participation in the labor market. Boosting women generalized self-
efficacy, or the belief in own ability to attain desired outcomes, increases the likelihood of women
enrolling in a program that offers work opportunities, as well as probability of having employment
In addition, social norms dictating what is and is not expected of women in society can also create
significant barriers to women’s participation in the labor market, starting with the development of
6
their aspirations as girls. The high prevalence of violence and harassment of women is also
intertwined with these social norms and can create impediments to women’s labor force
participation through mobility constraints. If a woman is unable to safely commute to work, due to
gender norms or safety concerns, she is theoretically less likely to participate in the labor force.
Examining potential connections between safe transit and women’s labor force participation and
employment is a growing area of research and policy intervention.
Third, we discuss how external constraints such as income shocks and demand-side factors inhibit
active engagement in the labor market. Low demand for female labor force participation is a direct
constraint. The empirical literature studying changes in demand for female labor through trade
liberalization and growth in specific sectors find that increases in demand for female labor are
associated with increase in female labor force participation. Similarly, targeted government
programs that guarantee jobs for women (e.g. in the form of quotas) are sought to increase FLFP.
However, the question of whether such quotas are desirable from a more general economic
perspective, such as in terms of productivity impacts, remains unanswered. One clear point
emerging from the literature, though, is the major potential barrier represented by discriminatory
hiring practices. While the evidence for this in developing countries is thin, studies have documented
bias in hiring practices in other contexts, suggesting the benefits of gender-blind hiring practices.
Government interventions from the demand-side focus on establishing equal employment
opportunity between men and women. But the direction of the impact will depend on the details of
the policies, as they may end up disincentivizing female hiring.
By exploring the constraints that inhibit female labor force participation, we can find evidence-
based, actionable policies to promote economic opportunities and shared prosperity for all. As this
paper discusses, there are several recommended pathways to boosting women’s labor force
participation, such as providing affordable, accessible, and high-quality childcare services that does
not create additional costs for employers. Yet, most of the policies and programs under
consideration have shown mixed results or require additional research. Specifically, though there is
more research on women’s employment, the overall literature on female labor force participation is
thin. By continuing to invest in this research agenda, we can better understand women’s decision of
whether to work and enable them to make a choice that benefits themselves, their households, and
their economies.
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INTRODUCTION
Women comprise half of the world’s adults, and therefore potentially half of its labor force. Their
participation in the labor force is essential. Removing barriers that restrict women from entering the
labor market is a crucial part of the Sustainable Development Agenda, which seeks that all human
beings develop their full potential (UN SDG). This by itself is enough of a reason to mobilize
resources towards achieving equality. However, increasing female labor force participation also
matters from an economic perspective. Numerous researchs point out to the positive impacts in
economic growth as a result of addressing gender inequality (Klase, 1999; Klasen and Lamana, 2009;
Steinber and Nakne, 2012; Kabeer and Natali, 2013; Gonzales et al, 2015). Unfortunately, women
are 27 percentage points less likely to participate in the labor market than men (International Labour
Organization 2016). This low participation rate holds across all regions (see Figure 1).
Figure 1: Labor force participation by gender and region (%), 2019
Source: World Development Indicators. Note: Labor Force Participation (LFP) is ratio of active individuals to working age
population (15+) using modeled ILO estimates.
Middle East and Northern Adrica as well as South Asia have the lowest rates at around 20-23%. Sub-
Saharan Africa and East Asia and the Pacific have much higher rates, of between 59-61%. However,
none of them approach the 74% world average of MLFP. Additionally, male´s rates of participation
do not exhibit regional differences as extreme as the rates in women, the variance in male labor
force participation across regions is not as high as for women.
Moreover, trends not only differ by region, they also vary substantially across time within each
region (see Figure 2). In the Arab States and Northern Africa, FLFP across time is persistently very
low; and in Eastern Asia and Southern Asia it has decreased noticeably since the early 2000s.
Meanwhile, over the same period, FLFP experienced robust growth in Latin America and the
Caribbean, and in Sub-Saharan Africa. The former region is particularly striking as it has experienced
greater growth in FLFP than the rest of the developing world.
0
10
20
30
40
50
60
70
80
90
East Asia &
Pacific
Europe &
Central Asia
Latin America
& Caribbean
Middle East &
North Africa
Sub-Saharan
Africa
South Asia
Female LFP Male LFP
8
Figure 2: Trends in female vs male labor force participation across regions (%), 1990-2019
Source: World Development Indicators. Note: Labor Force Participation (LFP) is ratio of active individuals to working age
population (15+) using modeled ILO estimates.
Given such heterogeneity in female labor force participation across time and region, we seek to
explore in detail the existing empirical literature to identify important barriers that inhibit women
from entering the labor force. As the contexts in these regions differ greatly, we will consider a
broad array of literature – beyond the usual market constraints.
Furthermore, given the differences in trends in FLFP we will explore literature that covers policy
interventions, as well as changes in the identified barriers, to delineate successful policy
interventions. Throughout the review we seek to identify important gaps in the existence of these
barriers, on the policy that impacts FLFP, and in the research and evaluation of such policies.
We choose the main focus for this review to be on female labor force participation instead of
eployment, as a distinct and important measure for policy. While labor force participation and
employment are fundamentally linked, they do measure different aspects of women’s performance
in the labor market. Conceptually, female labor force participation is concerned with women’s
decision of whether to work, while female employment is concerned with whether women are
working. The female labor force participation rate is traditionally defined as the proportion of
women engaged actively in the labor market—currently employed or unemployed but actively
seeking to work—out of a country’s population of women in working-age (15 years and older) (ILO
2016). The female employment rate, on the other hand, is the proportion of those women who are
actively participating in the labor force: either who are employed or engaged in work.1 Thus, labor
force participation captures the decision to actively engage with the labor market while employment
represents an equilibrium outcome, resulting from the interaction of supply side (job seekers) and
demand side (employers) of the market for female labor.
The distinction we make between women’s labor force participation and employment is lacking or is
underemphasized in previous reviews, but it is not trivial. Female labor force participation does not
1 In this context, employment comprises both paid and unpaid work and both formal and informal work .
9
always move in tandem with employment, and it is possible for women’s employment to be high
even when their labor force participation remains low. Indeed, the global rate of female
employment— measured as percentage of the labor force—has remained relatively high at around
94%. In contrast, the global rate of female labor force participation has stood at around 50 percent2.
Employment rates, while useful, miss a large part of the story. Figure 3 illustrates this point, namely,
while employment rates are similarly high between men and women (blue line), a much greater
share of working age women are not in the labor force (green line). They also miss that the low rate
of FLFP has been stagnant over time and slowly declining, even as employment rates remain high.
Figure 3: Labor force participation and employment, global average
Source: World Development Indicators. Notes: Indicators are aggregate at the global level. Employment to Population
Ratio is defined as ratio of employed individiuals to working age population (15+). Labor Force Participation (LFP) is ratio of
active individuals to working age population (15+). Employment to Labor Force Ratio is ratio of employed individuals to
active labor force participants.
Empirical literature studying female labor force participation in developing countries is actually thin
and fragmented. Thus, we are obliged to include studies on female employment and self-
employment as well. Throughout the review we systematically denote whether the studies
discussed are concerned with either female labor force participation or female employment.
Moreover, much of the empirical literature on determinants and policy impacts is indirect. Only
some of the interventions discussed in this review were specifically implemented to directly improve
female labor supply (i.e. childcare policies). In most cases, evidence of policies on labor force
participation rates comes from unforeseen or unintended side-effects of policies that had different
primary aims, such as conditional cash transfers, rural electrification, or macro-level trade
liberalization policies.
The following review is organized around key drivers of and barriers to female labor force
participation. We explore them in detail in the following sections. First, we examine how constraints
in endowments such as time, education, financial and social capital limit women’s participation in
the labor force. Second we review evidence on the role of choices, preferences, norms and beliefs of
the labor market on FLFP as internal factors. Third, we discuss how external constraints such as
income shocks and demand-side factors inhibit active engagement in the labor market. Finally, we
2 There has been a gradual decline in FLFP after the global financial crisis in 2009. Worldwide rates average at 48% since
then.
10
conclude with some lesson learned form policy recommendations and draw up an agenda for future
research.
While additional studies and interventions focused on female labor force participation are an
important part of understanding and expanding women’s economic opportunities, increasing FLFP is
not a panacea on its own. Higher rates of FLFP do not necessarily imply improved empowerment for
women, because the measure does not consider the quality of the work. Labor that is unpaid,
informal, and low-return are all counted equally alongside high-paying, high-quality jobs. Thus, in
addition to increasing FLFP, policies that increase the availability of high-quality work for women are
also necessary to close the gender gaps in the economic arenas. This paper’s recommendations on
increasing FLFP should be considered in tandem with knowledge of the drivers of quality
employment, self-employment, and female entrepreneurship, as the one discussed by Mckenzie et
al (2019) in Kenya or by De Mel et al (2014) in Sri Lanka.
DRIVERS OF FEMALE LABOR FORCE PARTICIPATION
Over the past century, women joined the labor market in increasing numbers. However, in the past
30 years we have seen a desaceleration in this trend and even a setback, as FLFP rates have been
slowly decreasing (see Figure 3). In developed countries such as the US, labor force participation of
women aged 16 and older doubled from 33.9% in 1950 to 64.6% in 1987. This rate then remained
stable and strated slightly decreasing, reaching 59% by the end of 2019 (U.S. Bureau of Labor
Statistics, 2020). In developing countries, as Klasen (2019) states, the trends are quite
heterogeneous. Since 1990, FLFP rates have decreased in South Asia, remained stagnant in East and
South East Asia, and have slightly increased in Latin America and the Caribbean. Overall, the big
picture of FLFP does not look promising. Estimates from Sivard (1985) place world rates of labor
participation among women in 1960 at 47% – with developing counties rates at 45% and developed
economies at 52%. Today, 60 years later, ILO estimates point to a 47% worldwide FLDP rate – 46%
for low and middle income countries and 53% for high income countries. There has been almost no
progress.
This section explores the key driver of FLFP and why there has been almost no progress in the past
50 years. A strand of the literature points to the combined effect of economic growth, technological
advances, rising education and declining fertility among women as the main drivers of FLFP for
periods of positive in the developing world. We will discuss these market conditions in the context
of how they impacted women’s enwoments and initial conditions to enter the labor force.
Particularly, how these positively affect women’s availability of time, level of education and type of
skills, level of financial inclusion, and access to networks.
On the side of fertility decline, literature in developing shows that it has freed up women's time
spent with being pregnant or caring for a small child substantially, enabling greater labor force
participation. The invention of contraceptive methods has foster this fertility decline and has
reduced the opportunity cost of engaging in long-term career investments (Goldin and Katz, 2002).
The diffusion of technology that allowed household chores to be less time consuming has reduced
the time burden of household chores (Fernandez, 2007). Similarly, the expansion of female
education and consequent closing of gender gaps in education in developing countries indirectly
11
enables labor market participation by facilitating a fertility decline and promoting female labor
market opportunities directly. Finally, the observed high per-capita growth rates in developing
regions boost labor demand and draws women into the labor force particularly given high existing
male participation rates (Klasen 2017).
However, the trends in FLPF rates are highly heterogeneous and suggest that economic growth,
fertility decline, and an expansion of female education need not translate into commensurate
increases in female participation (Klasen 2017). On the side of the fertility decline, there is evidence
that it can lead to lower female labor force participation, particularly among the poorer, rural, and
less educated women. Preibe (2010) associates this reduction with the relaxation of budget
constraint from having one less child. Moreover, the link between education and female labor force
participation is also not straightforward, as a U-shaped relationship is often observed, with high
participation rates at the very low end (women with no or very few years of schooling) as well as the
very high end (women with complete tertiary education). Lastly, economic growth must be
accompanied by adequate job opportunities specific to women in order to absorb them into the
labor market. This is not always the case, as the job-generating growing sectors of the economy may
not match the supply of female labor in terms of skills, norms, or preferences.
The mixed evidence fostered alternative explanaitions of why female labor force participation is
lower than male’s. Two stand out. One highlights the role of internal aspirations, personal
preferences and beliefs of the appropriate role of women as drivers of FLFP. According to this
litertature, it is women’s inner constraints that limits their low level of involvement with the labor
market, rather than the market itself pushing them out of it.
A second alternative explanation highlights the role of external shocks as drivers of the level of labor
force participation of women. Governemnt policies, shifts in technology, and social protection
schemes directly impact worker’s labor supply. Differentiated impacts by gender could be explained
by policies that disproportionately affect women, or by shifts in technology that affect a
predominantly female economic sectors. Finally, economic shocks that affect households where
men are traditionally wage earners may result in a differentiated effect on labor force participation
for women.
Below we summarize the most prominent studies in each of the three described group of drivers of
female labor force participation in the literature: endownments, internal constraints and external
constraints.
1. Endownments
1.1. Time
Given a limited time endownment, an invidual’s time is split between leisure, paid labor, and
household production (unpaid labor). The gendered distribution of tasks within the household,
where the woman is responsible for most household chores, leads to competing demands on
women’s time. The 2012 World Development Report on Gender Equality and Development notes
that women work more than men, once unpaid work is accounted for. As a result of the unequal
allocation of care responsibilities, many women experience time poverty which adversely affects
their ability to participate in the labor market and work in the jobs that they may desire (WBG,
12
2015). Furthermore, unequal domestic responsibility restrics women’s employment options to
occupational arrangements that allow time flexibility and management of care responsibilities.
Literature points that the most prominent elements competing for women’s time are fertility,
carework for children and elderly, and household tasks. We review the main evidence of how these
elements affects female labor force participation in this subsection.
Fertility
Choices regarding fertility, labor market participation, and (adult) human capital attainment are
linked, and dynamic in nature. Understanding the link between fertility and labor participation is
challenging for two reasons. First, the direction of the causality is unclear. While fertility and birth
timing have important impacts on labor market participation and wages, participation and wages
also influence timing and fertility decisions (Clarke, 2016). Second, two countervailing forces are at
play. An additional child increases the mother’s opportunity cost of labor through a higher domestic
workload, thus decreasing labor force participation; but at the same time, childbearing also
significantly increases demand for consumption goods in the household, which pushes mothers to
join the labor force. The net effect of these countervailing forces is uncertain, as it depends on the
context and on women’s budget constraints.
Some of the literature that points out to a negative relationship between fertility and labor
participation uses natural experiments – such as the introduction of birth control pills (Bailey 2013)
or changes in abortion legislation (Bloom et al. 2009 and Angrist and Evans 1996) – to conclude that
children have a negative effect on their mother’s labor supply. Similarly, instrumental variable
estimates are also a popular methodology employed to determine the effect of fertility on mothers.
Giving birth to twins is an unanticipated event, shifting the total number of children. Similarly,
parental preferences over mixed sibling-sex composition increases the number of children by an
additional one. Angrist and Evans (1998) are the first to find a negative impact of an additional child
on the FLFP in the US, using the abovementioned instrumental variables. Caceres-Delpiano (2008)
also use multiple births to explore the impact of childbearing on FLFP in 42 countries. Eventhough he
focuses on employment rather than labor force participation, which is also negatively affected by
having an additional child, the signs and magnitude of existing estimates largely point towards a
significant negative impact of the effect of fertility on labor market outcomes. However, the
negative effects he finds are not universal.
The sign and degree of the relationship between fertility and mother’s work behavior is often
mediated by the country’s stage of economic development (Aaronson et al 2017). Using
instrumental variable strategies on historic series of data spanning 103 countries between the 18th
and 21st centuries, Aaronson et al (2017) find that fertility has a negligible effect on female labor
supply in low-development contexts, but a large negative effect in high-development contexts.
Similarly, Agüero and Marks’ (2008) find no effect on women’s labor force participation for a group
of 6 Latin American countries. Their study explores an alternative instrument of childless mothers
undergoing infertility treatments. Although these findings suggest a lack of negative effect on poor
and developing countries, the criteria is not entirely straightforward. Godefroy’s (2017) analysis of
changes to women’s legal rights in Nigeria finds a robust negative relationship between fertility and
mother’s work, while Jaramillos’s (2016) study using instrumental variables in Peru finds a negative
13
relationship on women’s employment as well. Thus proving that the negative effects of fertility are
not circumscribed to developed economies.
Two key forces interact as wages increase during the process of economic development: households
face an increased time cost of fertility (substitution effect) but also experience increased income
through better job opportunities (income effect). Goldin (1995) argues that the substitution effect
dominates during economic development and arises from changes in the sectoral and occupational
structure of female jobs. In particular, as economies evolve, women’s labor market opportunities
transition from agricultural and self-employment to urban wage work. The latter tends to be less
compatible with raising children and causes some movement out of the labor force (Jaffe and Azumi
1960; McCabe and Rosenzweig 1976; Kupinsky 1977; Goldin 1995; Galor and Weil 1996; Edwards
and Field-Hendrey 2002; and Szulga 2013).
Given the impact that an additional child has on women’s FLFP, a growing literature documents a
causal relationship between access to child care or early education and the propensity of mothers to
work, a finding that is consistent with leaving the workforce when labor market opportunities
become less compatible with child rearing (Berlinski and Galiani 2007; Baker, Gruber, and Milligan
2008; Cascio 2009; Havnes and Mogstad 2011; Fitzpatrick 2012; and Herbst 2017). In line with this,
recent documented shifts to positive correlations between total fertility rate and FLFP in some
developed countries, which may be attributed to higher substitutability of direct childcare and
childcare outside the home, as well as access to higher quality childcare outside the home (Hwang,
et al 2017).
These results indicate that there are mediating factors in the fertility-FLFP relationship. The ability to
share the childcare burden for women in developing contexts is a factor in their availability to enter
or remain in the labor market. In a study exploiting regional differences in China’s second child law3,
Cao (2019) show that while a second child reduces maternal labor force participation, particularly
for women with migrant husbands, labor supply is not reduced for women living in three-generation
families. The author(s) attributes this to the availability of time and resources for childcare from
other family members. Similarly, using panel data from Ghana, Heath (2017) shows that fertility can
actually increase female labor supply given sufficiently high returns to financial investments in
children. The author finds that labor supply on the extensive margin (whether to work or not) drops
in the presence of children, but this effect is mediated by the presence of other adults in the
household.4
Given women’s disproportionate care burden, when deciding to join the labor force women may
place high value on flexibile work hours, parental leave, or support in terms of childcare. In the
absence of maternity leave, formal and informal chilcare, and flexible work arrangements (temporal
flexibility or part time work), women are left with options of the informal economy, or self
employment, in order to balance work and domestic responsibilitiles. Surveys and interviews with
women working in the informal sector have supported this connection between responsibilities and
3 In some parts of rural China, couples that have a female firstborn are allowed to have an additional child.
4 Interestingly, labor supply on the intensive margin (hours worked) actually increases as a result of a child for the women
who stay in the labor force. According to the authors the the increase in labor supply might correspond to a higher
pervceived importance of financial inputs in children, as compared to time investments.
14
informality or self employment. For example, 20% of women surveyed in the Philippines reported
family responsibilities as the reason they engaged in informal rather than formal work (Verceles &
Beltran 2004). A study of small businesses in Bangladesh found that 13% of women cited family
responsibilities as a reason they turned to entrepreneurship, as compared to 1% of men (Marcucci
2001).
Carework
Childcare
There is a growing body of evidence which suggests that the increased availability of childcare
options results in an increase in female labor force participation and employment rates. Part of this
literature has investigated this relationship mostly for younger age groups (preschool) in developed
countries with relatively high FLFP rates (Blau and Tekin (2007), and Blau and Currie (2006)
summarize some of this vast literature). The majority of these studies use non-experimental
methodologies, using childcare expansions, discontinuities in eligibility or other policy changes to
address this causal effect. Results for the US, Canada and European countries with similar FLFP are
mostly positive (Gelbach, 2002; Baker et al., 2008; Lefebvre and Merrigan, 2008; Nollenberger and
Rodriguez-Planas, 2015), generally finding that childcare increases the probability of mother’s labor
force participation and employment.
Evidence from developing and middle-income countries also shows a strong positive link between
access to childcare and maternal labor force participation. Evaluation of a childcare expansion policy
in Mexico, which covered 90% of the cost of enrolling children, increased women’s probability of
working (Calderon, 2012). The author uses triple differences and synthetic controls methods to
estimate the impact on FLFP. Additional studies in Brazil and Chile support the relationship between
female labor force participation and accessability of childcare options. In Brazil, de Barros et al.
(2011) evaluate the impacts of a lottery for selection into free childcare. They find sizeable effects on
women’s employment. The effects are large even among women who did not work before the
lottery, suggesting an increase in FLFP. In Chile, Martínez and Perticará (2017) performed
randomized evaluation on a program that gave mothers three hours of daily afterschool care for
children aged 6 to 13 years old. They showed that access to the program increased female labor
force participation by 7% and employment by 5%.
Other authors also focus on employment variables. Berlinski and Galiani (2007) use difference in
difference methodologies to estimate the impact of subsidized public schools in the context of large
scale pre-primary school construction project in Argentina. They find that the program has positive
effects on women’s employment. Similarly, Attanasio and Vera-Hernandez 2004, use instrumental
variables to identify the impact of a program in Colombia that provides informal child care. They find
that the programme has large positive effects on women’s employment rates and hours worked.
Notheworthy, the evidence indicates that the presence of childcare options are not enough – they
must be affordable and of good quality. For example, a study in Romania between 1989 and 1995
concluded that both the female labor force participation rates and the decision to use paid childcare
were associated with the price of childcare (Fong and Lockshin 2000). Another study, using data
15
from the European Community Household Panel, showed a correlation between female labor force
participation and the affordability of childcare (Del Boca and Locatelli 2006).
The importance of child care prices is also true for low and middle-income countries. Lokshin et al
(2000) analyze the effect of child care costs in Kenya. They find that higher costs disencourage
households from relying on formal childcare and negatively impacts mother’s labor participation.
Relatedly, in a thorough review of the relationship between childcare and female labor supply in
Latin America in particular, Diaz and Rodriguez-Chammussy (2016) argue that the cases where
childcare does not have a positive impact on female labor supply, including participation, are driven
by poor quality childcare.
Eldercare
In addition to childcare, women face the brunt of elderly care in the household, another factor
competing for women’s time. If the burden falls only on them, FLFP is expected to drop. Female
labor supply thus depends on whether women live with their parents or in-laws. But the empirical
results around this relationship are mixed and context dependent, as are norms around post-marital
residence that affect women’s time allocation. As seen in the abovementioned case of China, living
with elederly generations can also reduce a mother’s burden and thus increase their FLFP, if the
parents and in-laws provide child care support.
Several authors established a positive impact of intergenerational co-residence on the labor force
participation of married women: living with parents or in-laws increases the probability of female
labor force participation by 56 percentage points in the US (Kolodinsky and Shirey, 2000), by 28
percentage points in China when analysis is limited to co-residence with own parents (Shen et al.,
2016), by 19-24 percentage points in Japan (Oishi and Oshio, 2006), and by 7 percentage points in
urban China (Maurer-Fazio et al., 2011). All of these studies claim that the overall positive impact is
due to parental assistance with child care and housekeeping. Only Shen et al. (2016) explicitly test
and confirm this claim.
However, other recent empirical studies find a negative relationship between elderly care
responsibilities and female labor force participation, particularly in contexts with stricter normative
expectations around women’s activities. This can be especially detrimental to women’s lifetime
labor market outcomes, as the largest amount of intergenerational time transfers are provided by
middle-aged women (45-65 years old) both to their older and younger generations of family
members. Thus, the height of their care responsibilities often come during women’s most productive
years (Albertini et al. 2007; World Bank Group 2015). Landman et al (2016) find that the effect of
coresidence on female labor supply in Kyrgyzstan is negative and insignificant. The authors exploit a
tradition in Central Asia where the youngest son of a family usually lives with his parents, and
instrument co-residence with being married to a youngest son. The authors find that women who
co-reside in Kyrgyzstan have more children, spend similar time on housekeeping tasks and child care,
and invest more time in elder care compared with women who do not co-reside. These mechanisms
appear to be inherently different from those in less patrilocal settings where co-residing parents
relieve the women from household chores.
There are still few acceptable market-based options for eldercare in developing countries compared
with childcare (Todd 2013). In the developed context, motivated by the fast aging population, the
Japanese government introduced a long-term care insurance (LTCI) initiative that provided cash
16
allowances for elderly care services purchased through the formal sector, leading to growth in the
formal elderly care market. Sugawara and Nakamura (2014) estimate the effects of care
requirements on female labor supply in Japan for periods before and after the launch of the LTCI.
They find that while the female employment rate is negatively correlated with caregiving for
disabled elders, the magnitude of this negative correlation decreased after the introduction of the
LTCI. This is consistent with a model where the long-term care insurance initiative decreased costs of
formal elderly care, freeing up time for daughters-in-law to work outside the home. They find
heterogeneity of effects by gender of the elder. As a result of the LTCI, care for male elders no longer
formed an obstacle to female work, while care for female elderly still has negative effects on the
female labor supply, indicating that when a female elder is disabled, not only caregiving but also
housekeeping burdens are turned over to family members, thereby posing a more severe time
constraint for coresiding females.
Overall, it seems that the context and the expected role of women in each society determines
whether or not the presence of an elderly persons in the household will affect a women’s propensity
to work. In settings where living with elderly is common and not closely tied to them needing care,
coresidence may enhance the capacity for women to work, as older parents or parents-in-laws assist
with child-caring duties. In other settings, like the US, where coresidence is relatively uncommon
unless the older person needs care, the presence of elderly likely imposes demands on women that
compete with their capacity to work. Finally, in more traditional patriarchal society where women
are expected to sacrifice their careers for their husbands and parents/in-laws, eldercare is a
deterrant of FLFP.
Home Production
Besides allocating time to fertility and caring for others, women are also in charge of the home
production (e.g. cooking, cleaning). According to the 2020 Gender Snapshot of the United Nations5,
women work 3 times more than men on unpaid care work at home. They collect information from
various sources, including household surveys, national survey, and time use sueveys, among others.
Based on the latest data point from surveys in over 65 countries, women’s proportion of time spent
on domestic chores and care work is 10 percentage points (pp) higher than men. While men report
spending on average 6,8% of their time on household chores, women report spending 17,2% of their
time on household chores on average. Mexico is the most unequal in terms of the distribution of
time (with a gendered difference of 20 pp in the reported proportion of time spent in household
chores) and Belgium is the most equal of the group (with a 0.4 pp difference).
As women spend time doing household chores, it is expected that the introduction of new
technology and access to infrastructure such as electricity, gas, pipe water, and transportation
would reduce the the overall workload of domestic responsibilities in some contexts and lead to
increased female labor force participation.
Rural electrification has been a growing policy agenda in many countries, with potential to impact
labor supply. Dinkelman (2011) shows that large-scale household electrification post-Apartheid in
5 The Gender Snapshot is a report from the Women Count initiative of United Nations. The main goal of the project is
collect gender sensitive indicators to monitor advances in the SDGs. It aims at changing the way gender statistics are used,
created, shared and accessed. See more in: https://data.unwomen.org
17
South Africa led to a 9 to 9.5 percentage point increase in female employment. This was concurrent
with increases in electric lighting and electric cooking over the same five-year period – indicating
that decreases in time costs of home production were contributing to women’s decisions to join the
labor force. Similarly, household electrification in Nicaragua was found to increase young rural
women’s (women under the age of 35) propensity to work outside the home by 23% (Grogan and
Sadanand 2013). Access to electric light dramatically increased the length of the working day
allowing women the time-savings to work outside the home.
However, the increase in willingness to work due to electrification does not necessarily translate into
higher employment. Salmon and Tanguy (2016) model spouses’ joint labor supply decisions in
response to rural electrification in Nigeria using an instrumental variables strategy to identify the
causal effect of electrification. They find that employment probability is not significantly changed for
either men or women. In addition, when considering dependant labor supply decisions among
husbands and wifes, electrification only increases husbands’ working time.
Increasing women’s agency over their own fertility choices, expanding access to childcare and
eldcare, and ensuring access to basic services such as electrification and running water allow women
to participate in the labor market with grater involvement. The policy agenda in the developing
world might already be focusing on policies that free up women’s time. However, we must
acknowledge these policies do not ensure more opportunities (jobs), nor do it translate into good
quality employment.
Some policy circles highlight how good it will be for women to participate in the efforts to expand
the care industry. But again, while we agree that more opportunities may mean that more women
will end up working, there is a trade-off because those jobs tend to be of low quality, burdensome,
and badly paid. Thus, they might increase FLFP (by freeing up women’s time and offering
employment opportunities), but reduce quality of employment and reinforce gender-based
segregation.
1.2. Skills & Education
Educational attainment is one of the key determinants of labor market outcomes in developed and
developing countires. As the seminal work of Becker (1961) stated, individuals accumulate a set of
skills through education or training which they can then use to join the labor market, become more
productive or even earn higher wages. More recently, Heckman et al. (2010) found that educational
attainment at almost every level causally produces gains on the labor market.
Education levels of women have considerably improved in many developing contexts over the last
decades. In East Asia and the Pacific (EAP), girls used to complete less than one year of schooling in
1950. Now, they enroll and stay in school as or even longer than boys (World Bank Regional Report,
2018a). According to the regional report of EAP, girls are also learning as much or more than boys –
they outperform boys by one year in reading test scores.
Other regions follow a similar pattern. South Asia has not achieved universal enrollment, but has
significantly decreased the enrollment gap between boys and girls. India has managed to shrinked its
gap to near zero-levles. Similarly to East Asia, girls in primary and secondary school in South Asia
perform at the same level as boys. However, retention in post-secondary levels is still low and
women are tracked into low-productivity streams. When it comes to choosing fields in higher
18
education, women do not go for STEM fields, which has long term effects on their employment
opportunities and expected income (World Bank Regional Report, 2018b).
Such a lack of opportunity is also present in other regions. In the Middle East and North Africa, girls
outperform boys in literacy and numeracy since very early on. However, the region exhibits some of
the lowest female labor force participation around the world: only 20% of women participate in the
labor force. This paradox is partly explained by social norms in the region, which we will further
explore in the next section (World Bank Regional Report, 2018c). In the Africa region, there is not
much difference in performance between girls and boys, but girls are disproportionately left out of
lower-secondary and upper-secondary levels. Cultural practices such as child-marriage and early
pregnancies are a leading cause of this gender gap (World Bank Regional Report, 2018d).
There are several channels through which education can later affect female labor force participation.
We focus on two ways of acquiring skills and education—one is through formal schooling
(educational attainment) and the other one is through continuing education (vocational and job
training).
Educational attainment
Theorically, the higher the educational attainment, the better the labor outcomes. Higher levels of
schooling increase the opportunity cost of not entering the labor market, as higher education
corresponds with higher potential earnings. Schooling also affects labor market participation
indirectly as it raises the age of marriage and age at first birth, allowing women to develop stronger
ties to the labor market. More educated women may be more empowered to influence household
decision making or resisiting constricting social norms, leading to greater labor market activity
Empirically, contrary to common belief, the relationship between education and female LFP is weak
and the evidence that portrays this relationship is thin. As Klasen (2019) states, this relationship
often takes the form of a U-shaped function, with higher participation at lower levels of educational
attainment and at very high levels of education. The recent expansion of schooling around the
developing world has thus shifted women’s educational attainment to intermediate levels,
associated with lower levels of labor force participation (minimum of the U-shaped function).
Some research of the nature of this relationship has been found in Latin America and the Caribbean
and in East Asia. Gasparini and Marchionni (2017) find that in the past 2 decades the expansion of
education has allowed more women to get tertiary education, and that these women are more likely
to enter the labor market. Similarly, in Bangladesh, Rahman and Islam (2013) find that since the
1990’s economic growth acceleration, education and female labor force participation have been
increasing in tandem. However, women’s employment in Bangladesh during this period seems too
dependant on a single industry. The authors also find challenges related to wages and other aspects
of compliance with labor standards, that affect women disproportionately.
A specific case in Bangladesh is studied by Shamsuddin (2015). The Female Secondary Education
Stipend Programme provided girls with stipends, books, tuition fees, and exam fees, conditional on
school attendance in grades 6 to 10. A long-term impact evaluation of the program finds that
women who were exposed to the program for the full five years had 6 percentage points higher
labor force participation rates. However, participation actually decreased wages by 17% as the
surplus of secondary-school-educated women struggled to find productive employment.
19
In India, Klasen and Pieters (2012) analyze the trends in urban FLFP from 1983-2005, period where
India’s economy grew significantly. They find that economic pull factors (i.e. more job opportunities
and higher-paying jobs) only attract highly educated women into the labor force, increasing their
participation. For women with less than secondary school, no effect of higher wages on participation
is found.
Similarly to the evidence on labor force participation, gains in education do not always translate into
gains in employment, indicating presence of bottlenecks during the school to work transition. For
example, despite well documented effects of the Mexican conditional cash transfer program
Progresa/Oportunides on human capital accumulation, there is very little evidence of program
impacts on employment, wages or inter-generational occupational mobility among program
beneficiaries (Rodriguez-Oreggia and Freije, 2012). Levy (2007) warned beforehand about the
education conditionality of this cash transfer and the fact that increases in schooling as a result of
the program needed to be met with better economic and social conditions in order to result in
better labor market outcomes. Particularly, the author highlights the need of additional policies
from the supply side. Thus, even when education is accompanied with better economic conditions,
programs that aim to improve education and employability of the workforce need be complemented
by demand-side interventions.
Job and vocational training
Beyond formal educational attainment, vocational and job training programs are an increasingly
common policy intervention to skill-up the workforce and tackle unemployment in developing
countries.
Unfortunately, the empirical evidence linking training programs with female LFP is largely
inconclusive. This is mainly explained by the fact that the evidence is generally indirect, measuring
employment rates but not FLFP. Participants in job training programs are, by definition, already
active members of the labor force, since they are explicitly preparing for work. However, there is
little information on whether the programs pulled participants from inactivity into the labor force, or
whether they were already active. Moreover, the impacts of job trainings programs on employment
rates vary according to the context and content of the programs: depending on the nature of skills
taught (hard skill, soft skills, or life skills), duration of the program, and incentives for employers to
hire workers trained in these programs.
In the case that the targeted sample are school-age girls (and are thus inactive by definition), there is
indirect evidence of skills training programs improving labor force participation. Bandiera et al
(2017) experimentally evaluate a women’s empowerment program in Uganda where adolescent
girls gained vocational training and sex education through adolescent development clubs. The
authors find that four years after the intervention, girls who received the training were 48% more
likely to be involved in income-generating activities. This effect is driven by engagement with self-
employment, and there is no impact found on wage employment.
In Liberia, an impact evalatuion of the Adolescent Girls Initiative (EPAG) – a public-private
partnership aiming to support adolescent girls and young women in transitioning from school to
productive employment – provides evidence that skills training can be an effective policy option
for increasing employment among young women. The program led to a 47% increase in employment
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and an 80% increase in average weekly income among project beneficiaries, compared to those in
the control group (Franck et al, 2014).
Despite the abovementioned positive effects, when it comes to the effect of job training program on
employment, there are some doubts on its effectiveness. One concern is that trainings affect
workers’ expectations of employment outcomes. If these expectations are not met by the labor
market, then workers may end up desincouraged. Acevedo et al. (2017) show the importance of
these expectations in Dominican Republic. They find that imbedding a soft skill component to a
vocational training program had positive effects on both skills and labor market expectations for
women, but only only improved expectations for men, with no impact on skills. This created the
conditions for discouragement as expectations exceed the returns to acquired skills. In the short
term, women had higher employment rates, in higher paying jobs, with higher satisfaction levels,
while men had zero and negative effects on employment outcomes. Over time, the women in the
control group were able to catch up and the men in the treatment group lowered their expectations,
accepting an employment that equalized them with the control group. While the program positively
improved women’s wellbeing, men were ultimately disappointed and discouraged, leading to
deterioration in the quality of their lives.
There is no consensus in the literature about a positive effect of job training on FLFP, but the
evidence seems to suggest that women respond positively to training. A still open policy question is
why women do not receive the same training opportunities as men. One hypothesis follows from
Lazer and Rosen (1990) who state that firms take into account the employees’ probability of finding
non-market rewards in the period following training before offering it. And, as women have a higher
probability of leaving the firm, firms often overlook them. An alternative hypothesis proposes that
women simply do not seek training opportunities—which could be explained by lack of information
about programs, lack of budget, competing responsibilities (e.g. childcare), credit constraints, or
negative perceptions about the relevance and quality of the training.
1.3. Financial Assets
Self-employment is an important avenue for women’s labor force participation. However, women
are often excluded from formal financial markets which constrains their entrepreneurial activities
both directly, via a lower capital stock for business development, and indirectly, via the
empowerment/ household decision-making channel.
Capital constraints
The Global Findex database shows that, while bank account ownership continues to grow globally,
gender inequality persists—particularly in developing economies where men are 9% more likely to
hold a bank account than women (Demirguc-Kunt et al, 2017). Limited access to financial products
results in reduced chances of overcoming capital constraints, a problem that is self-perpetuating as
lower starting capital means decreased ability to get capital using collateral6.
6 It is worth mentioning that recent literature is exploring promising and innovative ways around the credit constraint, such
as the use of psychometric data as collateral (see Alibhai et al, 2018 for instance).
21
Evidence about the impact of access to capital and financial inclusion on labor force participation is
very thin. Most studies measure labor supply on the intensive margin (i.e., hours worked) rather
than the extensive margin (i.e., labor market entry, including entrepreneurs), and the studies that do
explore female labor force participation as outcome do not differentiate by whether the respondent
was previously active in the labor market or not.
A strand of the (thin) literature suggests that financial inclusion does have a positive impact on self-
employment, wage-employment, and female empowerment (which may in turn affect female labor
force participation). Ausburg et al. (2015) explore the effects of offering loans to applicants who
were marginally rejected by a micro-finance institution on labor outcomes in Bosnia and find an
increase in labor supply and self employment among 16-19 year-old women. Similarly, Bruhn and
Love (2011) find sizeable positive effects of access to finance on labor market activity in the context
of the expansion of bank branches of Banco Azteca in Mexico. Access to finance reduced the
proportion of individuals not working. While men were more likely to become informal business
owners, women were more likely to become wage-earners.
Yet, other strand of the literature fails to find an impact of finance on labor outcomes. Crepon et al.
(2011) study the expansion of a microcredit program in rural Morocco. The authors find positive
effects of investment in the number of assets used for self-employment and in profits. However,
they fail to find effects on female empowerment, which included mobility inside and outside the
village. Similarly, Banerjee et al. (2015) study the effects of the expansion of a microcredit program
in Hyderabad, India. They find positive effects of access to credit on profits and investments, but no
effect on women’s empowerment.
Financial access and empowerment
Financial inclusion and access to savings and credit products can foster female labor force
participation by giving women agency to make consumption and savings decisions over household
income. For example, using data from an experiment in rural India, Desai and Joshi (2014) find that
the formation of self-help groups (SHGs) among rural women increases non-farm employment, and
decision-making and civic engagement among participating women. Via a mixture of increased
education, access to finance, and linkages to wider development programs, the SHGs help women
acquire greater personal automony. However, it is not clear whether the program affects LFP
decisions of previously inactive women and whether increased empowerment was the channel
through which the effect operates.
Furthermore, it is not only the availability of financial products but the type of products offered that
matter to lift constraints to female labor supply. Field et al. (2016) examine the role of supply-side
constraints linked to low household bargaining power and traditional gender norms in suppressing
female employment. Their hypothesis is as follows. Having a wife who works is a source of social
stigma or shame for Indian men who are expected to economically provide for the household
(Boudet et al., 2012). Low female bargaining power would thus induce latent female workers to stay
out of the labor force in order to abide by their husbands’ wishes. Increasing women’s bargaining
power could therefore draw women into the labor force and increase ability to control their own
22
income. This creates a positive feedback loop: an increase in control over their own earnings
incentivizes women’s work, which in turn increases earnings.
To test for this, the authors experimentally varied whether women’s wages from India’s public
workfare program were deposited into female-owned bank accounts instead of into the male
household head’s account (the status quo). The treatment increased women’s work, both in the
program and in the private sector, despite no change in market wages. Treatment effects are
concentrated among two groups of women: those who had not previously worked for the program
and those whose husbands disapprove of women working. The authors note that financial inclusion
alone did not move the needle on FLFP. Although the intervention roughly doubled the share of
women who had bank accounts, receiving only a bank account (with or without a supplementary
information session) had no observable impact on women’s employment or earnings. Thus access to
a safe place for a woman to keep her wages is not enough—resources need to be explicitly directed
to that savings account and women need to be given the basic tools to use it.
Innovations in digital financial products and services, such as mobile accounts and digital payments,
offer possible ways to lower the cost of access to financial services and enable women to control
and access financial transactions (such as remittances and wage payments) directly (World Bank
Group Gender Strategy 2016). Further research is needed about the extent to which increased
control over income and finances improve women’s labor force participation.
1.4. Networks & Social Capital
In the presence of information asymmetries between workers and firms, firms leverage networks to
identify and hire productive workers. Referred workers are more likely than non-referred workers to
be hired, all else equal (Pallais and Sands, 2015). Referral-based hiring has the potential to
disadvantage qualified women, highlighting another potential channel behind gender disparities in
the labor market. In Malawi, Beaman et al. (2018) show that men systematically refer few women,
despite being able to refer qualified women when explicitly asked for female candidates.
Similarly, using data on physicians’ referrals to surgeons in the US, Sarsons (2019) shows that
physicians become more pessimistic about a female surgeon’s ability than a male’s after a patient
death, indicated by a sharper drop in referrals to the female surgeon. Moreover, this effect is
projected onto other female surgeons (i.e., after a bad experience with a female surgeon, physicians
stop referring to other female surgeons)—this do not happen with male’s surgeons. Finally,
Magruder (2010) demonstrates that using the father’s networks has a positive effect on the son’s,
but not the daughters. The author also finds that mother’s connections do not seem to be matter.
Given that women are more constrained by lack of information about their productivity, tools that
help correct asymmetric information (such as networks) are valuable assets to increase the female
labor force participation. However, literature related to network and social capital mainly focuses on
the success of networking for matching job seekers to jobs (i.e., focuses on individuals that are
already part of the labor market), leaving out the relationship between networks and probability of
finding a job. The thin literature that explore this relation follows.
Stoloff et al. (1999) examine the effect of network structure on women’s paid labor force
participation in Los Angeles. Two findings regarding FLFP are worth mentioning. The first is that
women with more diverse and high quality social resources are more likely to enter the labor force,
23
after controlling for education and background. The second is that women from more disadvantaged
background with children rely on their social networks for childcare to enter the workforce. The
paper makes a distinction about the type of connections required for each outcome.
Puga and Soto (2018) also draw a distinction on different types of social capital. The authors draw
from empirical evidence from Chile to find that the relevant networks that drive women’s labor
force participation are those connections that are weaker but far-reaching. Networks connecting
women with high-status individuals. However, these networks are very unequal, as the positive
effects of using these networks are only valid among women in the richest quintile of the household
income. Given their findings, the authors reject the idea that policy should focus on social capital as
a way of increasing economic integration of women, as it shifts the responsibility of providing
women’s fair labor conditions from the state to the women.
Besides helping getting a job, networks also provide a bridge for women to join the labor force in
traditionally male-dominated sectors. Alibahi et al (2017) study the occupational gender gap among
entrepreneurs. Their findings show that women-owned enterprises that manage to crossover to
male-dominated sectors perform better on average than female entrepreneurs in female-dominated
sectors. They explore the mechanisms and find that it is not education nor skills what helps women
crossover, rather women’s network connections what helps them enter a the male-dominated
sectors. Specifically, the relationships with male relatives influences the probability of entering such
spaces. Pande et al. (2015) show that friendship networks also matter to join male-dominated
activities such as entrepreneurship. When women bring a friend to a business skills training, they are
more likely to take out a loan and to use it for business purposes, increase household income and
consumption, and less likely to report occupation as a housewife.
2. Internal Constraints
As the combined effect of purely economic factors is not enough to explain the low female labor
force participaton, an alternative strand of the literature hypothesizes that perceptions of the labor
market and beliefs about the self in relation to the labor market are likely drivers of women’s
decision to participate or not in the labor market. Empirical research around this relationship is
limited. We focus on three main internal constraints—perception of opportunities and the
environment, beliefs about self, reservation wages and norms.
2.1. Perceptions of opportunities
First, perceptions of opportunities available in the labor market (or lack thereof) may influence
women’s decision to participate. Several studies support the fact that availability of jobs and
perception of opportunities themselves are drivers of women’s empowerment. Jensen (2012), for
instance, provides evidence of how job recruitment services helped women in rural India get jobs in
a recently exogenously developed industry. As a result of job offers, women became less likely to
have children or get married and chose to enter the labor force, suggesting an increase in aspirations
for their careers.
Similarly, Heath and Mobarak (2015) study the impact of the expansion of ready-made garment
industry in Bangladesh. The authors find that the rise in job opportunities explains the decline in
fertility, the increase of age at marriage, and the increase of educational attainment among young
24
women. Majlesi (2015) studies the effect of job opportunitiy for both men and women in the
manufacturing industry of Mexico. The author finds that job opportunities increase women
bargaining power within the household, and the results are true for both working and non-working
women. Although neither paper directly addresses the reinforcement of labor force participation, as
the Jensen (2012) paper does, they do clearly state how perception of job opportunities lift women’s
internal constraint, as shown by higher bargaining power and the decision to delay marriage and
having children.
Second, even if opportunities are available, perception of the work environment (e.g.,
competitiveness, male dominance, etc.) may not be conducive to women entering the labor market.
Exploiting a natural experiment, Flory et al (2015) analyze whether competition incentives
differentially affect men’s and women’s labor choices, and the extent to which male connotations on
a job advertisement affect application patterns. The authors find that the applicant pool becomes
significantly more male dominated as the compensation package becomes more heavily reliant on
individual relative performance. This is mainly driven by women’s stronger aversion to competition,
rather than men’s preference for it. They also find that hiring into versions of the job that have
removed masculine connotations substantially attenuates gender differences in application
patterns.
This is consistent with Akerlof and Kranton (2000), who argue that gender–job associations are
drivers of gender-specific employment patterns and predict that women sort into employments
whose requirements match construed female attributes. Thus, it follows that, if available work
opportunities are (or are perceived to be) competitive or masculine, women would be less likely to
enter the labor market. However the extent to which this is a binding constraint to female labor
force participation is still an open question.
2.2. Aspirations & Self-confidence
Beliefs about own ability are also a key input to many economic decisions and are likely to impact
labor market outcomes (e.g. how job candidates present themselves). However, there is limited
empirical evidence from developed or developing countries linking psychological barriers such as
low aspirations or self confidence to female labor force participation. We expect this link to matter,
since there is evidence of the role of aspirations and self confidence on outcomes that are drivers of
LFP—such as education (Beaman et al., 2012)—and on outcomes related to LFP—such as
entrepreneurship (Campos et al., 2017) and employment (Heckman et al., 2006).
McKelway (2018) finds that women’s beliefs in own abilities are a constraint to employment and,
likely, labor force participation. Boosting women’s generalized self efficacy, or the belief in own
ability to attain desired outomes, increases likelihood of women enrolling in a program that offers
work opportunities, as well as probability of having employment. Similarly, McKelway finds that the
promotion of a work opportunity also leads to dramatic increases in enrollment for the work
opportunity but the promotion treatment (which was done with the family) has important
consequences for women’s control over income which in turn affects women’s decision to enroll in
the program7 A claim of impact on FLPF can be made to the extent that program enrollment is a
7 These findings are consistent with Field et al (2016) above, where money from a public workfare program was deposited
to female-owned accounts – instead of men-owned account. The treatment increased women’s work.
25
valid proxy for LFP. While the study uses a sample of women within a geographical cachment area,
there is no indication of their labor force status at baseline, and employment status was not a
sample selection criteria (a small fraction of women were employed at baseline).
Interestingly, the author also finds a positive feedback mechanism of employment on self efficacy.
Randomly offering a job to women who were enrolled in the program to receive work opportunities
results in higher scores on generalized self efficacy months later—supporting the hypothesis that
exclusion from the labor market is a driver of low self-confidence, which in turn further constrains
labor market participation.
Women are more likely to underestimate their skills (Niederle and Vesterlund, 2007) and are thus
less confident in their ability to obtain a job because of feelings of inadequacy or beliefs that no jobs
are available to fit their skill level. Coffman et al. (2019) study through laboratory and field
experiments the decision to apply to a more challenging and higher paying job. They find that
women were less likely to apply to jobs in male-dominated domains. Two factors drive this decision.
The first is that women have more pessimistic beliefs about their own abilities than men in male-
type domains. The second is that women’s belief of what is expected out of a candidate—referred
to “the bar” by the authors—is higher for a given opportunity. Although this paper provides
compelling evidence of the gendered difference of self-confidence, more research is needed to
understand whether this difference in beliefs also prevents women from participating in the labor
force.
2.3. Reservation Wages
Even though the gender gap in reservation wages is well documented, there is no direct evidence on
whether a change in the reservation wage may induce changes in labor force participation.
However, several strands of the labor literature combine to provide an insight into the role of
reservation wages as a driver of female labor force participation.
Gender differences in reservation wages may arise due to different preferences for non-working
time (Bowlus and Grogan, 2009), differing personality traits and anticipate discriminatory hiring
behavior by firms. Different personality traits include men being overconfident (see Barber and
Odean, 2001), women being risk averse (Eckel and Grossmann, 2008; Pannenberg, 2010), women’s
preferences for occupations with higher social prestige (Kleinjans and Fullerton, 2013) or women’s
preferences for workplace flexibility (Goldin, 2014). Anticipate discriminatory hiring behavior by
firms implies that women and adjust their reservation wage downwards to maximize future
employment prospects.
Furthermore, this reservation wage gap has been shown to be a key factor in the realized wage gap.
Caliendo et al. (2017) examine the importance of the gender differences in reservation wages for the
gender wage gap in a decomposition analysis using instrumental variables to address the potential
endogeneity of reservation wages. The authors find that the inclusion of reservation wages halves
the gender gap—making the remaining difference economically small and statistically insignificant,
and implying that reservation wages play an important role for the gender gap in realized wages.
Given the importance of reservation wages for realized wages, it is expected that the former also
play an important role in determining female LFP. Two opposing potential mechanisms are at play
when it comes to reservation wages and FLFP. They are either too high, deterring women from
26
working as their expectations are unrealistic (supply-side issue). Or they are too low, so wages don’t
exceed the reservation wages (demand-side issue). The evidence is not consistent on which of these
mechanisms is at play for different contexts and it should be part of a research agenda. A strand of
this (inconclusive) literature, which focuses on the relationship between cash transfers and
remittances and reservation wages, follows.
Low and middle-income countries have implemented conditional or unconditional cash transfer
schemes to improve income and alleviate poverty at the household level. One concern is that the
income effect from a cash transfer, combined with a sufficient preference for leisure, could lead
women to drop out of the labor force upon receiving cash transfers. However, the empirical
literature does not find this hypothesized negative impact of cash transfers on female labor force
participation in eligible households. Banerjee et al. (2015) study this relationship in the context of
seven conditional and unconditional cash transfer programs in six countries: Honduras, Indonesia,
Morocco, Mexico (two programs), Nicaragua and the Philippines. All of these cash transfer schemes
were implemented through randomized trials and aimed at reducing poverty. The authors do not
find significant effect of transfers on female (or male) labor force participation among eligible
households. Similarly, Alzua et al. (2013) empirically evaluate three of the same transfer programs
in Latin America (RPS in Nicaragua, PRAF in Honduras, and PROGRESA in Mexico) and similarly find
that the programs have not introduced any substantial disincentives to work and that they have had
no significant effect on labor supply for individuals or households in treatment localities.
Similar to other forms of non‐labor income, it is expected that remittances increase the reservation
wage of non‐migrants in the household and decrease their likelihood of entering or staying in the
labor market (Killingsworth, 1983). On the other hand, households may use the extra income to
invest in an existing household enterprise or to start a new business. This would likely increase the
demand for household labor and result in an increase in non‐migrants' labor supply. Empirical
evidence from studies on migrant sending countries supports the reservation wage hypothesis and
points to a decline in labor force participation—the effect is particularly important among women
(Rodriguez and Tiongson, 2001; Acosta, 2006; Amuedo‐Dorantes and Pozo, 2006; Lokshin and
Glinskaya, 2009; Mendola and Carletto, 2009).
2.4. Norms
Finally, the empirical literature also suggests that gender norms are one of the main drivers of
female labor force participation. Norms are persistent, culturally-specific, and passed down from
generation to generation (Fernandez et al., 2004; Fernandez and Fogli, 2009), but can change over
time (Fernandez, 2013). Agency, economic opportunities, and endowments are linked and often
reinforce gender equality outcomes (Duflo, 2005; 2013). Even when economic opportunities and
endowments are closer to gender equality, social norms can create barriers to success.
These constricting norms shape power relationships and restrict women’s mobility and network,
which in turn shape gender roles regarding time use and household responsibilities. Furthermore,
these usually turn into discriminatory legislation and practices (Klugman 2014, World Bank 2011b).
In the following subsections we provide an overview of some of the relationships between norms
and FLFP. It should be noted that we do not intend to include every aspect of social norms
essentially because norms underly everything.
Social Biases & Gender Norms
27
Firstly, it is well documented that gender social norms restrict women’s activity choices. Muñoz
Boudet et al. (2013) review qualitative studies from 370 focus groups in 20 countries and confirm
that, in contexts where it is considered inappropriate for women to engage socially or commercially
with unrelated men, women’s economic opportunities are restricted (e.g. being forbidden to work
outside of the home). In Pakistan, Adeel et al. (2017) find that, as a result of social norms
constraining women to avoid interaction with men in public spaces, women conduct far fewer trips
outside the home for work than men. Furthermore, when women do travel, the distance is much
shorter. In India, men explicitly state that they do not want their wives to work for pay outside the
home (Field et al., 2016). In Pakistan, a large proportion of women who do not work outside the
home report that their husbands and fathers exclusively made the decision of whether they were
allowed to work (Field and Vyborny, 2016). Norms also dictate how and to whom job opportunities
should be prioritized in context of weak demand for work. Particularly in northern Africa, Eastern
Europe, South Asia and east Asia, respondents to the World Values Survey (Wave 6), indicate that
when jobs are scarce, men should have more right to a job than women.
Unfortunately, the direct causal relationship between norms, men and women's personal
preferences, and women's actual labor market decisions is not well understood. Bernhardt et al
(2018) begin to fill that gap by investigating the extent to which women's versus their husbands'
support for (or opposition to) female labor predicts actual employment decisions. First, they find
evidence of important gender asymmetries in the perceived social costs associated with female
work: respondents report that the husband of a working wife will receive sanction from more
community members than the wife herself. Consistent with this, men are systematically more likely
than women to voice opposition to women working. Though the authors do not have causal
estimates, they find suggestive evidence that the husband’s beliefs about women’s work and the
wife’s perception of her husbands beliefs are stronger predictors of the wife’s employment than the
woman’s own beliefs.
Similarly, in the context of Saudi Arabia, where through the custom of guardianship men dictate
their wive’s labor supply decision, Bursztyn et al (2018) provide experimental evidence that
misperception of social norms is a source of labor market frictions and correcting normative beliefs
yields positive employment outcomes for women. They show that the vast majority of young
married men in Saudi Arabia privately support FLFP outside of home from a normative perspective,
while they substantially underestimate the level of support for FLFP by other similar men. Correcting
these beliefs about others increases married men's willingness to let their wives join the labor force
and this decision maps onto real outcomes: the wives of men whose beliefs about acceptability of
FLFP were corrected are more likely to have sought a job outside of home.
More research is needed to understand the causal effect of norms on FLPF, as well as the extent to
which the preferences of husbands, fathers, and other male figures regarding their women’s
participation in the labor market, relative to the woman’s own preferences, shape women’s supply
of labor.
However, the impact of gender norms on female labor force participation has indeed been largely
observed indirectly. For instance program effects are larger where norms are more equalitarian,
suggesting that more equalitarian norms are positively related with FLFP. By the contrary, countries
with strict gender norms and patriarchal values tend to have lower levels of FLFP. A clear example of
this pattern is observable in the Middle East and North Africa (MENA) region, where in spite of
28
reaching learning equality among boys and girls, FLFP rates are the lowest in the world. Many
authors have tried to provide an explanation to such paradox, and found that patriarchal norms and
personal values explain most of the variation in FLFP (Diwan and Varnatova, 2017; Assaad et al,
2018).
Other research also address the impact of gender roles on FLFP indirectly through evidence from
intrahousehold decision-making model. Lowe and McKelway (2017) use a field experiment to
examine the intrahousehold decision making regarding employment in India. The researchers
partnered with a manufacturing company to offer employment opportunities to married women.
Gender differences in work preferences meant there was an intra-household tension: women were
often interested in working outside of the home, while their husbands opposed the idea. By
experimentally varying the presentation of the work opportunity, the researchers were able to
examine how information and communication affects decisions around female employment.
First, there is no evidence that husbands strategically withhold information from their wives; they
fully disclose information about the employment opportunity and there are no gains to providing
the information to women in addition to or instead of husbands. The authors argue this is because
substantial bargaining power allows husbands to make decisions without needing to withhold
information. Second, bringing women to the decision-making table by encouraging discussion
lowered enrollment by 6 to 9 percentage points, indicating that joint decision-making can backfire,
possibly due to arguments or husband’s resentment of suggested equality in discussions. Finally, the
study finds that symbolically empowering women in decision-making by giving wives enrollment
tickets backfires in the short-run, dramatically raising dropout rates, due to men being less
supportive and accommodating of a decision that was not their own. Taken together, these results
suggest that careful consideration should be devoted to the presentation and encouragement of
women’s involvement in the household take-up decision.
Finally, it is important to note that norms are not fixed and static, and dramatic changes can be
possible. In the United States, for example, in 1936 fewer than 20 percent of people supported the
idea of wives working if husbands could support them. By 1998, that figure had increased to more
than 80 percent (Morton et al 2014). Developing countries have also progressed with respect to
these values according to the UNDP’s Gender Inequality Index, constructed on the basis of questions
such of whether men should have more right to jobs than women. However, the changes are very
different in magnitude. While the highest developed countries have gone from index values of 0.33
to 0.1758 in the past 20 years, developing economies have gone from 0.56 to 0.47.
And, even though a good deal of attention has been paid to the intergenerational cyclicality of
negative gender norms, positive intergenerational effects are possible as well. Fernandez et al.
(2011) argues that the growing presence of a new type of man—one brought up in a family in which
the mother worked—has been a significant factor in the increase in female labor force participation
over time. They present cross-sectional evidence showing that the wives of men whose mothers
worked are themselves significantly more likely to work. Growing up with a working mother either
influenced a man’s preferences for a working wife or directly made him a better partner for a
working woman (say, by increasing his ability to cooperate and be productive in household work).
8 The higher the Gender Inequality Index the higher the gender inequality is in a country.
29
The presence of this different type of man, in turn, made investing in market skills and becoming a
working woman more attractive. As the number of working mothers increased, so did the
proportion of men raised with this different family model, which then helped to increase the relative
supply of working women of the following generation. In this way, women who worked set an
example for their sons, and thus made it easier for the next generation of women to follow in their
footsteps.
In a similar fashion, Olivetti et al (2016) show that mothers and other female role models play an
important role in female labor supply decisions. The authors use the variation in student
composition within schools across cohorts to find that own mothers’ working hours and peers’
mothers’ working hours affect women’s own working hours in the future. They find that the
pathway is likely through transmission of norms rather than possible human capital accumulation
aided by working mothers’ increased investments in their children. Furthermore, peers’ mothers’
labor supply decisions have a larger impact when the adolescent girl is socially closer to her peers’
mothers.
Safety & Mobility
As with social norms and women’s economic activity, it is also a stylized fact that women’s mobility
is often constrained by risk of violence/harassment, lack of access to transportation, and gender
norms (Salon and Gulyani, 2010; Anand and Tiwari, 2006). This mobility constraint inevitably reduces
women’s labor supply. However, the extent to which mobility constraints are binding in inhibiting
entry into the labor market has not been widely empirically documented (Borker, 2017).
In developing countries, safety concerns and limited access to transport reduce the probability of
women participating in the labor market by 16.5%, with serious consequences on the economy: the
global GDP could grow by an additional $5.8 trillion if the gender gap in male and female labor force
participation is decreased by 25% by 2025 (ILO WESO Report, 2017). In response to these safety
concerns, countries as varied as Brazil, Egypt, India, Japan, and Mexico have offered women-only
transport options, such as women-only carriages on trains and cabs specifically for women, driven by
women. However, to our knowledge, there is still no evidence of the impact of these policies on
female labor participation.
In a related context, Borker (2017) builds a willingness-to-pay model for travel safety and finds that
young women in Delhi are willing to choose a lower quality university at which to study or pay an
additional nearly $300 than men to have a safer route to commute to university. This quantification
of the trade-offs that women make in educational decisions implies that mobility constraints are
likely impacting women’s labor force participation decisions as well.
3. External Constraints
Finally, another competing hypothesis to the belief that economic factors are the main drivers of
female labor force participation is the external constraints hypothesis. It is a fact that governemnt
policies, shifts in technology, and social protection schemes directly impact worker’s labor supply. If
these affect workers differently by gender, then we would expect that external factors also affect
the female labor supply. We focus on two main external constrains: income shocks and labor
30
demand. As in the internal constraints literature, evidence exploring the relationship between
female LFP and the constraints is limited. The most important evidence follows.
3.1. Income Shocks
In households where men are traditionally the wage-earners and women are responsible for home
production, increased employment uncertainty faced by men can lead to increased uncertainty in
household income. In periods of economic uncertaintly, two opposing forces affect female labor
force participation: the income effect predicts that women who are secondary wage earners will
tend to temporarily increase labor supply when their husbands suffer unemployment (known as the
added worker effect, AWE), while the substitution effect predicts that unfavorable economic
conditions will lead to discouragement and operate in the opposite direction. On the other hand, in
periods of economic growth, the income effect predics that lower unemployment and higher
earnings of male partners and the consolidation of social safety nets will alleviate women's pressure
to look for a job and negatively affect their LFP.
In practice, the strength of these effects depend on the relevance of other factors, such as the
availability of alternative strategies to cope with negative income shocks (child labor, unemployment
insurance, etc.) and the existence of imperfect credit markets together with liquidity constraints. For
instance, using data for the US, Mankart and Oikonomou (2016) find that households provide
insurance against labor income shocks---when the primary earner (the husband) becomes
unemployed, the wife joins the labor force. However, unemployment insurance distort this dynamic
because wives have less incentives to leave the labor force in the first place. Similarly, Garcia-Perez
and Rendon (2020) find that the AWE holds for the US labor market but the unemployment
insurance may significantly alter the labor decisions of married couples due to a reassignment of the
breadwinner role from men to women.
In developing economies the income effect may be larger because they usually lack extended
unemployment insurance benefits, many households face financial restrictions, and the role of
women as secondary workers is reinforced by solid traditional family structures with a strong
attachment to traditional gender roles, and low levels of women’s skills and educational attainment.
In addition, given the importance of the informal sector in the countries of the region, entry and exit
barriers in the labor market are relatively low, which facilitates changes in female participation (Basu
et al., 2014; Maloney, 2004).
Serrano et al (2017) find empirical evidence consistent with such a model using fixed effects
estimation of female labor force participation across eighteen Latin American countries between
1987 and 2014. The authors find a countercyclical pattern where better economic conditions for
primary workers cause a delay in secondary workers’ entrance into the labor market. This
relationship is stronger for married women (either in formal or consensual unions) that are rural
areas, and in low income households. They also provide evidence that the expansion in conditional
cash transfer programs is another relevant factor associated to the deceleration in female labor
supply in Latin America. In particular, the authors find that an increase in the coverage of such
transfers is associated with a fall in female LFP. This result is consistent with the hypothesis that
women decide to delay their entrance to the labor market due to higher unearned income and to
the time required to comply with the conditionalities associated with these programs.
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There are several empirical studies that analyze the validity of the AWE hypothesis in the region. For
instance, Martinoty (2015) uses the collapse of the Argentina’s convertibility regime as a natural
experiment to evaluate the effect of husbands’ labor situation changes in the decision of their wives’
participation, finding evidence of a statistically significant AWE. Similar results are found by Cerrutti
(2000) and Paz (2009) also for Argentina in the 1990s and 2000s, respectively, Fernandes and Felicio
(2005) for Brazil, and Parker and Skoufias (2004) for Mexico. On the other hand, McKenzie (2003a)
and MacKenzie (2003b) find no evidence on the presence of AWE when studying household
strategies to compensate the negative shocks from the financial crises of 2002 in Argentina and 1995
in Mexico, respectively.
In a more recent work, Bhalotra and Umaña-Aponte (2010) use individual data from 63 developing
countries combined in a cross-country panel with aggregate variables such as GDP for the period
1986-2006. They find that the relationship between female labor and growth is negative on average
for Latin America and Asia, but positive for Africa, which, the authors suggest, is due to a
conventional family structure where income pooling is less the norm and there are fewer
opportunities for paid employment. The authors argue that the characteristics that magnify the
countercyclical pattern include the low levels of education, the positive assortative mating among
the less educated, rural residence, and high fertility, among other factors related to limited wealth.
Overall, these findings suggest that insurance motives underpin the dynamics of women’s work
participation.
3.2. Labor Demand
Increase in labor demand can both improve the employment rate among individuals already in the
labor force, and potentially increase female labor force participation among women who were not
previously working, who see accessible labor demand.
There are several ways in which changes in demand for employment (both perceived and actual)
affect female labor force participation. These can be divided in two broad categories: (i)
macroeconomic policies that lead to increased employment demand through public work, quotas, or
sectoral shifts; (ii) and firm-level policies affecting the costs and incentives to hire women.
Macroeconomic Policies
Many countries implement public works programs in order to build infrastructure and decrease
unemployment. Descriptive evidence suggests that these programs are associated with gains in
female labor force participation. Furthermore, these public works projects often demand low-skilled
labor, meaning that even those individuals who previously were not engaged with the labor force
can easily pick up the necessary skills on the job. This is particularly important for women, as women
tend to have lower skills and target low-skilled labor.
One example of such a program is the National Rural Employment Guarantee Act (NREGA) in India.
In this program, all households are eligible for 100 days of employment, which can be split between
adults in the household. The guaranteed work is low-skilled manual labor. However, about 30% of
jobs are reserved specifically for women. The program was developed to appeal to women
(especially women outside the labor force) as it guaranteed provision of work, pay that is equal
across genders and higher than prevailing wages for women, work is provided locally, and ensures
on-site child care. In a survey of female NREGA workers in 2008, about half said that if they hadn’t
32
been working through NREGA, they would not have been working at all (Khera and Nayak 2009).9
Using a natural experiment exploiting phases of implementation, Azam (2012) finds that NREGA has
a positive impact on labor force participation and wages, and both of these impacts are primarily
driven by impacts on female workers. Given that NREGA was designed to ease multiple constraints,
unclear which was the main factor (or combination of) responsible for observed increases in FLPF.
Again in India, Ghani et al (2013) find that female leaders allocate more jobs in the national public
works program to women, through local implementation, thus increasing demand for female labor
directly. Furthermore, there is a growing literature that points that increasing access to public goods
that women care about, such as roads and healthcare, under female political leaders, led to greater
female labor force participation (see Priyanka, 2019). Thus, evidence points that quotas for women
(by increasing the demand for labor, even if jobs are not expanding overall) can have an effect on
female participation. Then, the question is whether such quotas are desirable from a more general
economic perspective such as in tems of productivity impacts—i.e. it could be the case that impacts
are mixed depending on whether the jobs are high/low skills, but there is no enough evidence to
address this relationship.
Government economic reforms can also affect the female LFP. In Bangladesh, the government
pushed an aggressive economic reform to foster the export-oriented garment industry during the
decade of 1980. Heath and Mobarak (2015) study the impact of the increased labor demand due to
growth in this industry, which rewards literacy and numeracy skills. Using a difference-in-differences
approach, they find that growing up in a village that was within commutable distance of a garment
factory increases a woman’s probability of having ever worked outside the home, in any sector, by
about 13 percentage points. Furthermore, women who grew up in such villages attained higher
education and delayed childbearing, arguably in response to this noticeable labor demand in
garment factories for young women who had completed secondary school.
Similarly, liberalization of trade may also impact female LFP. For instance, the government of Brazil
reduced the trade protection during the 1987-1994 period. Gaddis and Pieters (2017) explore the
relationship between this reform and female LFP in the following years. Exploiting the geographic
exogenous variation in exposure to tariff reductions across states due to the trade liberalization and
find that tariff reductions were associated with an increase in female labor force participation and
employment after two years. The effect is explained by a shift of the economy from agriculture and
manufacturing (male-dominated industries) to trade and other services. Kis-Katos et al. (2017) also
explore the impact of trade liberalization of female labor outcomes for Indonesia. Using a similar
approach—exploiting geographic variation in tariffs—they find that the trade liberalization increased
employment and work hours for women. However, they do not find significant results on female
labor force participation, suggesting that impacts are driven by work on the intensive margin.
Worker Protection & Firm Incentives
9 One concern with growth in low-skilled labor demand for women, is that it might draw older girls out of school and into
the labor market (Sundaram and Vanneman 2008). However, Afridi et al (2013) actually find the converse in Andhra
Pradesh, India, in response to NREGA: their study finds that greater participation of mothers in NREGA compared to fathers
is associated with increased schooling of daughters.
33
Governments implement a variety of policies targeted at establishing equal employment
opportunity between men and women. Such policies include paid maternity leave, restrictions to
working hours, worker protections making it illegal to terminate a woman’s employment due to
pregnancy, and support for better provision of care services. These policies pose an interesting
contrast between the potential impact of these policies on women’s incentives to participate in the
labor market and firm’s incentives to hire women. They move in opposite directions, thus it is
unclear whether in the end the net effect of them on FLFP is positive or negative (i.e. because firms
would reduce demand for female labor, and reduced demand has a negative impact on
participation).
On one hand, such policies are designed to promote women’s employment—by placing legal
barriers to prevent firms from firing women or refusing to hire women due to fertility-related factors
such as pregnancy and early maternity care, or allowing women flexibility in working hours to ease
their ability to multitask wage work and housework and childcare obligations. Consistent with this,
Blau and Kahn (2013) study the relative decline in female labor force participation in the United
States compared to other OECD countries between the late 1990s and 2010. They find that over the
same time period as the decline, other OECD nations implemented family-friendly policies such as
length of parental leave, right to part-time work, equal treatment of part-time workers, and public
child care spending as a share of GDP, while the US did not. However, this increase in female labor
force participation in other OECD countries might be masking as shift to part-time work or lower-
level positions. Literature exploring these issues in developing countries is scarce because such
policies are rare to begin with and, moreover, an important proportion of women work in the
informal sector (Heath and Jayachandran, 2016).
Conversely, mandating that firms must provide maternity leave increases the costs to a firm for
hiring a woman in her childbearing years. As she is at high risk of fertility, the firm would expect to
have to pay wages during her maternity leave, without actually receiving the benefits of her labor.
Furthermore, there are transaction costs associated with hiring extra temporary labor, or reshuffling
work assignments to account for her time on maternity leave. Thus, mandating that a female
worker cannot be fired due to pregnancy and mandating paid maternity leave disincentivizes hiring
of female workers and leads to a downward shift of the labor demand curve. This could drive down
female employment rates and in turn discourage female labor force participation. Comparing
women of childbearing age to women past peak fertility in Colombia before and after enactment of
legislation which extended maternity leave by two weeks, Bustamante et al (2015) find that the
legislation led to a decrease of 0.7 percentage points in female labor force participation among
women of childbearing age who have more than a high school education, and a decrease of 0.9
percentage points for women with less than a high school education10. However, the study also
finds that women of childbearing age are more likely to be self-employed or working in the informal
sector after the policy change. Taken together, the results are consistent with a model where formal
employers have increased costs in hiring women of childbearing age after the policy change, and
women thus shift to self-employment or informal work or dropping out of the labor force
altogether.
10 Paternity leave is not guaranteed in this setting.
34
Legislation in Taiwan that restricted women’s working hours and mandated employer-provided
maternity benefits had more mixed effects. In a study looking at employment (rather than LFPF)
Zveglich and Rodgers (2003) exploit variation before and after the law went into effect in 1984, and
across sectors where the law did and did not apply (i.e., industry versus services), and find that
restricting working hours decreased the employment rate of women, while mandating maternity
benefits increased employment rates. The maternity leave result is in the opposite direction as what
Bustamante et al. (2015) find in Colombia. This may be explained because women in the service
sector were already de factor taking leave (more flexible, there is a reason why they sort themselves
into services and away from other sectors). This is consistent with a model where female workers
value maternity leave benefits more than the costs in Taiwan, but that the opposite is true in
Colombia.
In the United States, Gruber (1994) exploits variation in state and federal laws regarding whether
maternity benefits are mandated to be covered by health insurance, to estimate the effects of such
a mandate on the labor market. The study finds that employers shifted these costs onto employees,
but that employment probabilities did not change. However, the paper does not measure labor
force participation directly. In general, the literature is unclear on whether policies aimed to boost
LFP by protencting workers are offset by the incentives for firms to not hire workers due to higher
costs—in particular because there are not enough studies looking at FLPF (rather than employment).
POLICY RECOMMENDATIONS & AREAS FOR FURTHER RESEARCH
This review of drivers of FLFP has pointed out to different barriers that inhibit women from entering
and participating in the labor force. In the case of endowments, and specifically time, women’s
disproportionate burden of fertility, carework and home production, limit their labor supply.
Education, particularly in the form of job training, can boost FLFP. However, women seem to receive
disproportionately less training, both from the supply side – firms are less likely to favor women in
training – and from the demand side – women may demand less training given financial constraint
or lack of information. Financial constraints, in general, affect the ability to start a business or thrive
as self-employed. And although the relationship between access to finance and FLFP is still
debatable, women are often excluded from the financial market.
In the case of internal constraints, this review has shown how women’s labor force participation may
be negatively affected if perception of opportunities is scarce and the work environment is too
competitive, given women’s stronger aversion to compete. Other internal constraints that may also
hinder FLFP are lower perception of own skills and lack of confidence in the ability to obtain a job, as
self-confidence in general is a key driver of labor force participation.
This review also shows that there are external drivers of FLFP. Within this driver, the most relevant is
that of social norms. When norms are not inclusive or equalitarian, even economic opportunities
and endowments cannot offset them, and FLFP is likely to be lower. Persistence of social biases and
gender norms are a barrier to women’s participation in the labor market. Finally, one of the most
straightforward drivers of FLFP is labor demand. When labor demand is expanded, women who
were not previously working change their perception of accessible labor. If there are programs
specifically targeted to them, then FLFP will increase. Similarly, regulation with respect to worker’s
protection with a gender scope can help boost FLFP. However, if firms are mandated to establish
35
regulation that favors women, and this regulation is costlier on them, then they might be
disincentivize to hire women and thus imposing an additional barrier for FLFP.
As noted by the international literature, not all these barriers are present or represent a constraint
in every context. This section focuses on policy recommendations that lift constraints along the
abovementioned drivers. We must highlight that although the aim of these policy recommendations
is to increase female labor force participation, this should not be a means on itself. As we have seen
throughout the review, boosting FLFP can induce an equilibrium of lower wages, informal work and
job segregation for women. These potential outcomes should be considered when designing a policy
to increase FLFP. Such policies should be accompanied by interventions that ensure good quality
jobs.
While rising female participation rates are good for economic development (Goldin, 1990), the
welfare implication for women is less clear. To the extent that women are dropping out of
undesirable work due to improved household conditions, they may be better off. Thus, it is
important to note the push and pull factors that are at play in each context to understand the
welfare implications of FLFP. This is an area that requires further research. Other areas of research
and policy recommendations follow.
Understanding the relationships among fertility and female labor force participation are key. As
recounted above, the sign and degree of the relationship between fertility and mother’s work
behavior is often mediated by the country’s stage of economic development (Aaronson et al 2017).
But is never as straight forward as developed – developing countries. While additional evidence is
needed to understand the dynamics of the relationship, some policy recommendations can be draw
from the existing literature. The evidence has shown that expanding women’s legal access to family
planning services can expand their agency and allow for delayed childbearing (when preferred), and
boost women’s labor force participation. Beyond fertility services, it is also critical for societies to
provide access to high-quality, affordable, accessible care services or technologies that ease the time
burden of domestic tasks. This is demonstrated in several rigorous studies, ranging from Brazil to
China. Getting the exact details right, such as how to structure prices and whether care facilities
should be private, public, or a mix, will depend on the specific context.
Furthermore, while formal care provision is key, support for informal caregivers is also necessary
since families will likely continue to provide some unpaid care within the household. There are a
variety of different approaches and systems, tax incentives and allowances for care givers and/or
recipients (World Bank Group, 2015). The details of each policy are very important in shaping
women’s opportunities and constraints. However, depending on who bears the cost of these
policies, which are designed to reduce barriers for women of childbearing age, they can have mixed
impacts on female labor force participation. Notably, while policies addressing childcare have been
relatively well studied, understanding the needs of caregivers for the elderly and other care
recipients is an emerging area of research. As populations age globally, investing in more research in
this area is recommended. In addition, future research would be useful in better understanding the
impacts of the different policies suggested above, and in providing country-specific guidance on how
to get the mix right.
Regarding the acquisition of skills, additional research is needed in targeted incentive programs that
increase educational attainment, to see if this is an effective lever across contexts, what longer-run
36
impacts it can have on female labor force participation, and how best to implement these policies.
Up until now, evidence of the impact of additional years of schooling on FLFP is not conclusive.
On another hand, acquiring skills through training programs may be able to improve female labor
force participation – but the evidence for this is generally mixed and indirect, with much of the
success is dependent on the economic context and the exact structure of the program. While there
are many studies of training programs, they are quite heterogeneous (notably, in the skills taught,
duration of training, and incentives for employers to hire graduates) and show mixed results. Some
of the most successful training programs to date (in terms of changing employment rates) have been
driven by soft skills training, which focuses on self-esteem, decision-making, and agency, but this has
not been true across all contexts. To disentangle the differences in structure and skills and
understand the direct impact on FLFP, further analyses of the existing literature and more targeted,
systematic research is required.
Promoting women’s financial inclusion is a very important policy tool in improving female labor
force participation and other outcomes for women’s empowerment. The gap in women’s access to
finance is well-documented, and several policy options aim to tackle it: microcredit, savings
products, provision of bank accounts, individual direct deposit wages, psychometric scoring in place
of collateral, digital financial products and services, and self-help groups, among others. While some
of these policy options, such as psychometric scoring, are relatively new, others, such as microcredit,
have a plethora of research exploring their impacts. Studies have shown that accessing self-help
groups, microfinance, and microcredit, can improve women’s labor force participation. However,
more research studying the direct links between financial inclusion and female labor force
participation is needed to inform policies, and some of the specific approaches, such as
psychometric scoring as collateral, require additional study.
Exploiting social networks and capital is a way of reducing information asymmetries in the labor
markets. The literature does not point to women having a disadvantaged position in terms of
acquiring social capital in general. However, not all social ties are the same. On one side, tight
connections with family members offer women the possibility of entering the labor force by proving
childcare options. Weaker connections, but far reaching, on another side, increase the likelihood of
women entering the labor market. This is especially true when connections are with high status
individuals. However, as pointed by Puga and Soto (2018), such networks are unequal along the
income distribution. Thus, policy that focus on increasing social capital should be mindful of both the
type and distribution of these networks.
Lifting internal constraints for labor participation is a less explored policy arena, but there are some
positive experiences from which to learn from. Recruitment services, such as those studied in India
(Jensen, 2012), can increase women’s perception of availability of opportunities. In turn, higher
perception increase women bargaining power within the household, regardless of whether they end
up working or not. Instituting less competitive environments in the workplace, given the studied
lower aversion to compete of women, might also impact FLFP. However, this might reinforce the
gender-specific employment patterns, which would be concerning if these are sectors at the same
time more profitable. As explained by Bernhart et al. (2019), policies that support female
entrepreneurs to migrate to male-dominated sectors could prevent the gendered sorting.
Regarding social norms, studies indicate that strong female role models matter, so mentorship
programs may be useful, but more research on their potential links to FLFP is needed. As seen
37
above, mobility concerns directly connect to women’s labor decisions, as women cannot travel to
work if they are unable to do so by gender norms or safety constraints. Examining potential
connections between safe transit and women’s labor force participation and employment is a
growing area of research and policy intervention.
Up until now, policy options have been discussed from the supply-side. But of course, women’s labor
force participation also depends on demand-side factors. To address informational asymmetries
between women and employers, job referral and targeted recruitment of women for new industries
has shown to increase labor force participation. Governmental labor policies, such as mandated
maternity leave, can also impact female labor force participation. However, as highlighted before,
depending on the policy details, the impact may be positive or negative. The empirical evidence on
such policies is generally consistent with the expected mixed effects, though more research
specifically focusing on female labor force participation is needed.
As explored in this review, development policies can have a myriad of impacts on female labor force
participation. Most policies have ambiguous theoretical impacts on female labor supply, and in most
cases, the empirical evidence is also mixed. What the literature does tell us, however, is that the
impact of policies on female labor force participation depends on how the policies interact with
other aspects of the economy. Policies that alter female labor demand can only improve female
labor force participation if they address the unique constraints that women face: if women in the
population are sufficiently freed from home production, if they have sufficient skills and
qualifications to meet the labor demand, if they have access to finance, if they are not constrained
by cultural norms, and more. Policies that alter female labor supply can also only affect female labor
force participation if firms are willing to hire women and pay them sufficient wages.
Finally, although the focus of this review was on female labor force participation, many of the
studies reviewed in this paper focus on employment rate, since that is a more readily accessible
measure. However, measuring employment rate or entrepreneurship probability is not enough to
provide evidence on improving female labor market outcomes. Future research should take
advantage of existing labor force surveys or more nuanced measures of labor force participation in
primary data collection to shed light on barriers to female labor force participation specifically.
38
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