Female Labour Force Participation: Issue 2

We discuss evidence on constraints to women’s labour force participation, on both the supply and demand sides of the labour market. We identify several policies that are consistently helpful in increasing women’s labour supply: increasing childcare availability, empowering women within households, psychological interventions, prompting businesses to offer amenities like flexibility that female employees value, and increased globalisation among export industries that disproportionately hire women. Other policies we discuss, such as skills training or depression treatment show more mixed results and likely are not singlehandedly sufficient to increase women’s labour supply in environments where women face other large barriers to labour supply, such as social norms or childcare and other household obligations. We also identify several important barriers to women’s labour supply – namely, discrimination and a lack of safety and harassment in public spaces – for which policies that address these constraints are very much an open question.

The net effects of changes in these factors on labour force participation moving forward – i.e. will women’s labour force participation worldwide rise or fall? – is unclear. There is evidence that worldwide, women suffered disproportionate employment losses during the Covid-19 pandemic (Kugler et al. 2023). At the same time, the pandemic also led to changes in the labour market, such as the rise of remote work, which could potentially increase women’s labour supply. While remote work is currently most common in high-income countries, it seems likely to spread to low and middle-income countries as technology further improves. The rapid spread of artificial intelligence also has potential gendered implications, and there is evidence that AI can improve women’s outcomes in environments like hiring in the technology sector where they would otherwise face discrimination (Avery et al. 2023). Climate change is another factor that can potentially have big effects on women’s labour supply moving forward. Rising temperatures and changing weather patterns may influence the returns to specific crops or industries that differ in terms of their gender composition.

As these trends develop, we highlight several channels for future research that we believe will be impactful. One is that, in several instances, we highlight the fact that similar programmes or policies (such as increases in education driven by school-building programmes) have very different effects on women’s labour supply in different contexts, and we hypothesise that contextual factors like job availability in industries in which women have a comparative advantage (or otherwise find it desirable to work) drive these differences. Studies using microdata from multiple countries/contexts that provide theory-driven evidence on the factors that drive this heterogeneity would be very useful, similar to what Ashraf et al. (2020) did in highlighting the crucial role of bride price in determining whether school-building programmes prompt parents to increase their daughters’ education.

Two, there are several instances where work that bridges theory and empirics would be welcomed. For instance, we cite evidence that women’s bargaining position within the household affects their labour supply, but papers point out that a variety of theoretical models of intrahousehold bargaining can generate that prediction, such as models of collective versus non-cooperative bargaining. While, of course, we don’t believe there is one single “true” model of household bargaining, we believe that more research would be valuable to flesh out the intra-household determinants of women’s labour supply in various bargaining models, and highlight particular aspects of the bargaining process, such as the potential for veto power (Lowe and McKelway 2023). Similar open questions remain about the dynamics of intrahousehold bargaining over labour supply: e.g. how do husbands respond when working increases their wives’ bargaining power?

Three, many of the treatments that we document increase women’s labour supply are commonly supplied by governments or NGO’s. Theoretically, these treatments could be profitable to individual firms by enlarging their pool of potential employees and allowing existing employees to attend work more regularly and work with increased productivity. This was indeed the case in the soft skills intervention run by a garment firm in Adhvaryu et al. (2022). Additionally, the fact that families who received childcare increased total earnings by more than the cost of childcare in Bjorvatn et al. (2022) is also suggestive that childcare provision could be valuable for businesses. It would be very valuable to have more information on what interventions would represent a profitable investment for private firms, the contexts in which they succeed, and more generally, represent high benefit relative to cost.

Four, and finally, in several instances, we highlight the fact that relatively more is known about constraints to labour force participation than on the effectiveness of concrete policies that might address those constraints. For instance, abundant evidence points out that harassment in public limits women’s human capital accumulation and job opportunities. We cite evidence (Amaral et al. 2023) that police patrols focusing on sexual harassment reduce harassment and improves women’s mobility, but what other interventions are effective? Comprehensive and large-scale evidence on the effects of such policies is especially important in light of potential unintended negative consequences of policies such as single-gender areas on public transportation, which might reinforce the notion that women should not appear with men in public (Kondylis et al. 2020). We hope that more information on these policies – and more broadly, policies to increase women’s labour supply – will allow more women and their families to reap the benefits that a job can provide.

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