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Economic Development, Structural Change and Women’s Labor Force Participation A Reexamination of the Feminization U Hypothesis

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  • Isis Gaddis

    (Georg-August-University Göttingen)

  • Stephan Klasen

    (Georg-August-University Göttingen)

Abstract

A large literature claims that female labor force participation (FLFP) follows a U-shaped trend over the course of economic development. This feminization U hypothesis is motivated by secular patterns of structural change in combination with education and fertility dynamics. We show that empirical support for the hypothesis is rather feeble and hinges on the data used for the assessment. The PWT 7.0 revision of international GDP estimates paints a completely different picture of the relationship between aggregate GDP and FLFP than the previous PWT 6.3, with the U coming out much stronger under PWT 7.0 than under PWT 6.3. The feminization U also tends to vanish if we use dynamic instead of static panel data methods. Moreover, differences in levels of FLFP across the world related to historical contingencies are much more important determinants of women’s employment opportunities than the muted U patterns found in some specifications. Given the large margins of error in international GDP estimates at purchasing power parities (PPP) and the sensitivity of the U-relationship we propose an alternative way to explore the effect of structural change on FLFP. We use data on sector-specific growth, which do not require PPP comparisons and allow for a direct test of the effect of structural change on women’s economic activity. Our results suggest that agriculture, mining, manufacturing and services generate different dynamics for FLFP, but the effects are small in magnitude. We conclude that the feminization U hypothesis, especially its declining portion, has little relevance for most developing countries today.

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Bibliographic Info

Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 71.

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Date of creation: 08 Feb 2011
Date of revision: 25 Jul 2012
Handle: RePEc:got:gotcrc:071

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Keywords: Female Labor Force Participation; Economic Development; Structural Change; Purchasing Power Parties; Panel; GMM;

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References

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  1. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers, Institute for Fiscal Studies W95/17, Institute for Fiscal Studies.
  2. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers, Centre for Economic Performance, LSE dp0007, Centre for Economic Performance, LSE.
  3. Lind, Jo Thori & Mehlum, Halvor, 2007. "With or Without U? The appropriate test for a U shaped relationship," Memorandum, Oslo University, Department of Economics 21/2007, Oslo University, Department of Economics.
  4. Berta Esteve-Volart, 2004. "Gender Discrimination and Growth: Theory and Evidence from India," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers, Suntory and Toyota International Centres for Economics 42, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  5. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, Elsevier, vol. 126(1), pages 25-51, May.
  6. Andrea Brandolini & Anthony B. Atkinson, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 39(3), pages 771-799, September.
  7. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, Elsevier, vol. 57(2), pages 259-287.
  8. Blecker, Robert A & Seguino, Stephanie, 2002. "Macroeconomic Effects of Reducing Gender Wage Inequality in an Export-Oriented, Semi-industrialized Economy," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 6(1), pages 103-19, February.
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Cited by:
  1. Klasen, Stephan & Pieters, Janneke, 2013. "What Explains the Stagnation of Female Labor Force Participation in Urban India?," IZA Discussion Papers 7597, Institute for the Study of Labor (IZA).
  2. Dreher, Axel & Gehring, Kai & Klasen, Stephan, 2013. "Gesture politics or real commitment? Gender inequality and the allocation of aid," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Klasen, Stephan & Pieters, Janneke, 2012. "Push or Pull? Drivers of Female Labor Force Participation during India's Economic Boom," IZA Discussion Papers 6395, Institute for the Study of Labor (IZA).
  4. Ewa Lechman, 2014. "Female labor force participation and economic growth– re-examination of U-shaped curve," GUT FME Working Paper Series A, Faculty of Management and Economics, Gdansk University of Technology 21, Faculty of Management and Economics, Gdansk University of Technology.
  5. Gaddis, Isis & Pieters, Janneke, 2012. "Trade Liberalization and Female Labor Force Participation: Evidence from Brazil," IZA Discussion Papers 6809, Institute for the Study of Labor (IZA).

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