Sizing Up Gender Gaps in Labor Markets

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We know there are large gender gaps in labor markets. But how pervasive are they and what can be done about them? At the November 2012 LACEA (Latin American and Caribbean Economic Association) — LAMES (Latin American Meeting of the Econometric Society) conference in Peru, academics presented new evidence on the extent of gender gaps in the labor market and some of the underlying explanations for the patterns observed.

This article highlights papers that focus on two areas: (i) the pervasive gender gap in earnings that is evident across countries, and (ii) the cultural and intra-household dynamics that explain gaps in women’s labor force participation. The findings open the door for policies that will further attract women into the labor force in developing countries, where their share has been increasing rapidly in recent years — now at about 40 percent of the employed population.

Gaps in women’s labor force participation

Across regions and countries, there is considerable variation in the share of women in the labor force, although much less variation for men. As Figure 1 shows, in the developing world, the highest share for women is in Sub-Saharan Africa (close to 60 percent) — about double the level in the Middle East and North Africa, although South Asia isn’t far behind. Within the labor force, there can be large differences in the type of work men and women do. In low-income countries, women are disproportionately in agriculture and in non-agricultural self-employment, with women’s share in non-agricultural wage employment rising with a country’s income (see WDR 2012: Gender Equality and Development).

Women’s labor force participation (LFP) is lowest in the Middle East and North Africa. Source: World Development Report 2012: Gender Equality and Development, p. 200.

Is it possible that culture plays a part in explaining these patterns across and within countries? This is a question that Jaime Ruiz Tagle (University of Chile) explores in a study on how family values influence women’s decision to join the labor force in Chile — whose female labor market participation is among the lowest in Latin America despite the high level of educated women. He finds that culture matters, and it matters a lot. Women with more conservative and traditional attitudes tend to participate less in the labor market, although participation doesn’t seem to affect gender roles attitude, with values and decisions on economic roles exhibiting little change over time. His work supports the idea that attitudes are developed early in life and are correlated with family background. Gender gap in earnings

Staying with Chile — where the government promotes part-time work to attract more women into the labor force — a study by Andrea Bentancor (CommunidadMujer) and Virginia Robano (George Washington University) focuses on whether part-time work will be helpful in terms of women’s wages. They note the puzzling reality that in Chile part-time workers earn higher hourly wages on average than those working full-time, seemingly suggesting a part-time premium. Robano says they found that many part-time workers do earn a premium. But this can be understood as a selection issue, given that many highly educated women choose to work part-time rather than full time. However this premium turns into a penalty — the typical case in OECD countries — when one factors in that some of these part-time workers would prefer to be full-time if enough formal sector jobs were available.

How great a wage penalty is there for motherhood in developing countries? In anotherpaper, Jorge Agüero, Mindy Marks (both University of California, Riverside), and Neha Raykar (Colgate University) map the wage penalty associated with motherhood across 21 countries. Agüero reports that the age of the child affects the result, with younger children associated with mothers earning relatively less. For low- income women, the impact of having teenage children at home has a differential effect by gender — teenage sons aren’t associated with a wage penalty, while teenage daughters are associated with a wage premium, presumably as they assume more of the household responsibilities themselves.

Finally, how much does education matter? A study of 64 countries by Hugo Ñopo (Inter-American Development Bank) and Nancy Daza and Johanna Ramos (both Colombian National Planning Department) finds that earnings gaps also reflect gender education gaps — which, while closing among younger generations, can be significant among middle-aged workers in many countries. Ñopo notes that the sectors and types of professions that women and men choose to enter also matters. Moreover, wage gaps still remain significant, particularly in South Asia and Sub-Saharan Africa. Reducing these gender gaps

So what can be done to reduce these gender gaps? First, improving women’s education and altering stereotypes about which sectors women should work in will help, albeit slowly, over time. Second, expanding support for household responsibilities, including affordable child care, can enable more women to work. Third, explicitly treating issues of care as not being focused on women or men, as the Nordics do, would remove the gender card — for example, offering parental leave rather than separate (and unequal) maternity and paternity leaves. Fourth, improving the legislation and enforcement of “equal pay for equal work” would better protect a growing share of the workforce as more women enter the labor force. As Figure 2 shows, in rich and poor countries alike, greater legal protections of “equal pay for work of equal value” go hand-in-hand with a higher share of employees who are women — but significant progress remains on both of these dimensions across all country income levels.

Still fighting for “equal pay for work of equal value” Source: Economist Intelligence Unit’s Women’s Economic Opportunity Index

Finally, examples such as Bangladesh, Vietnam, and Cambodia illustrate that expanding economic opportunities — particularly in sectors that disproportionately hire women, such as the garment sector—can quickly raise the share of women who work. And the prospect of working in turn raises the education that girls are likely to receive in these countries.​


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