Economic development and female labor participation in the Middle East and North Africa: a test of the U-shape hypothesis

Paolo Verme

doi:10.1186/s40175-014-0025-z

Abstract

The Middle East and North Africa region is known for having low female labor market participation rates as compared with its level of economic development. A possible explanation is that these countries find themselves at the turning point of the U-shape hypothesis when countries transition from declining to rising female participation rates. This paper tests the U-shape hypothesis in countries in the Middle East and North Africa. It finds that the region has outperformed other world regions in terms of the main drivers of the U-shape hypothesis, including gross domestic product per capita, economic transformation away from the agricultural sector, female education, and fertility rates. These facts are consistent with nonparametric evidence that shows countries in the region are distributed over a U-shaped curve. However, parametric tests of the hypothesis point in a different direction. The region shows an inverted U-shape overall and great heterogeneity across countries and age cohorts that defies any law on the relation between gross domestic product and female participation rate. The explanation behind these findings may be economic and cultural. Jobless growth and the lack of growth in employment sectors such as manufacturing and services, which proved critical for female employment in other countries, weaken labor demand and strengthen the role of institutions that may discourage female participation, such as marriage, legislation, and gender norms.

Highlights

1 Introduction Studies on female labor market participation can be broadly divided into two groups: studies that look at the long-term factors that drive Female Participation Rates (FPR) over periods spanning decades and focus on epochal transformation of societies such as structural changes in the economy, and there are studies that use shorter time periods or cross-section information to derive associations between FPRs and other factors that can vary over the short-term such as education or marriage
The parametric analysis will start from the same premises but will dig further into the within - countries evidence to test the consistency of the hypothesis and determine how well the U-shape hypothesis applies to regions and Middle East and North Africa (MENA) sub-regions
The current FPR in Morocco would nicely fit with the U-shape hypothesis, and the long-term trend of low and more recently declining FPR could find an explanation in the context of economic development

Summary

Introduction

Studies on female labor market participation can be broadly divided into two groups: studies that look at the long-term factors that drive Female Participation Rates (FPR) over periods spanning decades and focus on epochal transformation of societies such as structural changes in the economy, and there are studies that use shorter time periods or cross-section information to derive associations between FPRs and other factors that can vary over the short-term such as education or marriage. The prevalent hypothesis about the long-term relationship between economic development and FPRs is the U-shape hypothesis (Boserup, 1970, Durand, 1975; Psacharopoulos and Tzannatos, 1989; Goldin, 1995). This broadly states that during the early stages of economic development, FPRs decline due to the initial structural changes of the economy and the transition from an agricultural to an industrialized society, while it increases in later stages when countries mature into modern economies, fertility rates decline and female education rates increase. The literature points to essentially five factors explaining the U-shape hypothesis: 1) the economic transformation of societies from agriculture to industry; 2) the increasing share of the female educated population; 3) long-term demographic changes including falls in fertility rates; 4) cohorts effects; and 5) evolving gender

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