Does Women's Employment Reduce Poverty? Evidence from Israel

This article focuses on two dimensions of the effect of women's employment on poverty. On the micro level, it examines the effects of women's employment on the odds of their household being poor, and, on the macro level, it examines the effects of women's employment on poverty rates in society. Analysing Israel's 1996 Income Survey, our findings confirm the general argument that women's employment is negatively related to poverty, in both female- and couple-headed households. The findings show that poverty levels are substantially lower in households in which women participate in the labour market, either on a full-time or on a part-time basis, than in households in which the woman is not economically active. At the macro level, our simulations demonstrate that increasing women's employment, even to a part-time level, would reduce poverty in both couple- and female-headed households, and would reduce the economic disparities between these two types of households. Our findings also suggest that while universal employment of female heads of household has an unequivocal equalizing effect on poverty rates, universal employment of women in couple-headed households increases the poverty rate. These findings reveal the different selection processes of women in female- and couple-headed households into paid employment.