Gender and Labour Allocation: the Role of Institutions and Policies in the Allocation of Female and Male Labor

There is enormous variation in the patterns of labor allocation, especially among women, across countries and over time, with significant consequences for the performance of the economy. The existing studies of this phenomenon often focus on binary choices and specific factors behind them, without taking account of the multiplicity of alternatives and the interactions among their determinants. Also, most studies rely on aggregate outcomes without taking into account the micro structures behind them. This paper takes a step to fill these gaps by employing a large, micro-level, cross-country dataset that allows us to identify the impact of country characteristics and policies on labor allocation probabilities, while allowing for nine different alternatives and controlling for individual gender, age, and education characteristics. Among many other results, the analysis suggests that effective government is one of the most important factors associated with female labor force participation (LFP) and employment. Also, in contrast to studies that suggest that natural resource rents reduce female LFP, we find that the opposite is true. Prevalence of Islamic culture proves to be a predictor of low female LFP, but we trace most of this effect to the traditions that are not necessarily Islamic. We also examine the role of business environment and labor protection policies. We find that some labor protection policies tend to be more beneficial for women’s labor market activity than for men’s. Such policies may be helping better employment matches to form.