Economic Impact of Womens Participation in the Labor Market: A General Equilibrium Approach

Woman’s participation in Brazilian labor market has increased remarkably in the last decades. Moreover, those who found jobs are the most qualified ones. Despite these changes, unemployment rates are still higher, the wages are lower, and the employment is highly concentrated in some sectors. In this context, this paper aims to evaluate the importance of woman’s work, and its growth, for the Brazilian economy in recent years. We use a Dynamic General Equilibrium Model for Brazil, which follows the Australian modelling approach, with two main developments. First, we disaggregate the labor factor by gender and qualification. Secondly, we split the household income into four types: labor; capital; government transfers and other sources. Two simulations were carried out, historical and decomposition, both for the period 2006-2013. Results showed that when analyzing the GDP composition, labor loses contribution. However, at the same time, woman’s contribution to total labor increased from 34.71% to 42.38%. This increase reflects not only the increase in women’s employment, but especially reveals its increasing contribution to the national income. The decomposition simulation demonstrates that 31.17% of the average growth of GDP in the period was explained by changes in labor usage, being 28.37% due to the increased use of high-skilled woman. Regardless the positive overall effect on the economy, for several sectors changes in labor composition produced negative effects on production growth in the period. In general, the positive impacts were concentrated in the sectors related to domestic demand, in which women’s work with high qualification gained importance, such as clothing items and accessories, leather goods and footwear, perfumery, hygiene and cleaning and most service sectors. On the other side, the negative effects were concentrated in manufacturing sectors linked to exports and the services related to them.