Does Wealth Influence Women’s Labor Participation Decision?: Evidence from Egypt

Abstract

This study examines the behavior of labor supply of women at different levels of household wealth status. It is widely demonstrated in the literature that variables such as age and level of education, as well as the demographic, social, and financial characteristics of the household influence deciding to join the labor market. However, this study argues that these determinants work differently according to the level or the well-being of the household, adding another to the literature on women’s labor supply in MENA.There have been few studies on women’s labor supply in the MENA region. Some have focused on labor supply and its elasticities in Egypt and Turkey [El-Hamidi (2003), and Tunali and Baslevent (2000)]. Others have focused on the fertility and timing of marriage in Morocco [Assaad and Zouari (2003)]. Household wealth is yet to be considered in the labor supply analysis.Only recently a couple of studies have handled the role of poverty in labor supply. Eberharter (2001) shows a difference between the gender role in the labor market between those above and below the poverty line in Germany. Dessing (2002) points to different labor supply elasticities for different wage rates in the Philippines.I start with the assumption that social and traditional gender roles, as well as economic factors, govern women’s participation decision in the labor market. This assumption is sustained only when household income/wealth is above a specific threshold. When household income falls below some threshold, only economic factors matter in the decision to join the labor market. Ultimately, economic hardships are likely to press women to work more hours. In this paper, there is evidence that responsiveness of hours of work, resulting from a change in wages, vary according to wealth level of the household. Several policy implications emerge from negative labor elasticity: the need to impose a minimum wage to avoid repeated cycles of poverty, as well as providing specialized training and education programs.