Smart Economy = Laws that are Tailored to Women as much as Men

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The surest way to empower women, close the gender gap, and ensure women’s participation in the development of their economy is through enabling equal job opportunities and employment for women.  Recent efforts such as the Women, Business and the Law (WBL) project show that labor laws do vary between men and women. As we will see in three studies below, the law has an incredibly significant role in understanding female employment.

Eliminating gender disparity in laws leads to higher levels of female employment

The first study finds that gender disparity in the laws favoring males over females tends to lower the employment level of females relative to males, a result driven by employment in small and medium firms. The study uses a broad measure of gender discrimination in laws across 66 developing countries using the World Bank Group projects: WBL data and the Enterprise Surveys data to measure female employment in the private sector.
Results show that removing disparities in the law that negatively affect females is associated with notable increases in female employment among small and medium enterprises. Twenty three out of the 66 countries in the study have four or more disparities in the law negatively affecting women; eliminating two of these disparities, is linked to an increase of more than 2.2 percentage points in the share of workers in SMEs that are female (against the average level of 31.7 percent). Figure 1 illustrates the point.
Figure 1: Percentage of females in the labor force decreases with greater disparity in the laws favoring men over women
Note: The figure is a partial scatter plot obtained after controlling for GDP per capita (logs, PPP adjusted and in constant 2005 International $, Number of females in the country as a percentage of the total population of the country and the percentage of women parliamentarians (in the lower house). The results shown do not change much even if we do not control for these variables. The graph is for the sample of small and medium firms and obtained after collapsing firm-level data for 63 countries at the country level.

Gender disparity in the laws also has a sharp effect on the absolute level of employment of females. In short, in the presence of gender disparity in the laws, suitable reforms or policy measures promoting female employment may be required to achieve greater employment of women and greater gender parity in employment.

Positive Effects of Non-discrimination clauses on hiring practices for women, but more so in richer countries, among small firms, and in countries with large female populations

Another study uses the same data to specifically look at the impact of non-discrimination clause in hiring practices along gender lines in 59 developing countries on the employment of women vs. men. The study finds a strong positive effect of the non-discrimination clause on female relative to male employment. The relationship between female employment and the non-discrimination clause is shown to be significant even after controlling for the level of income and education across countries, broader disparity in the laws along gender lines, and firm-characteristics. Results also show sharp variations in the effect of non-discrimination clause on female vs. male employment, with the effect being much bigger in the richer countries and countries with larger females in the population as well as among the relatively smaller firms.

Women work more when labor laws promote higher flexibility for working moms.

Yet another study demonstrates the importance of gender specific laws for female employment. Using data on whether a country gives additional legal rights or not for flexible or part-time work schedule to employees with minor children, the study analyzes the impact of such provision in the law on female employment. For a representative sample of manufacturing firms in 57 developing countries, the study finds that the stated provision in the law has a large positive effect on the employment of females. Specifically, on the conservative side, the provision in the law increases the proportion of females in the workforce by 7.7 percentage points, a large effect given that on average females constitute 32 percent of the workforce in the sample. This positive impact on female employment is much higher in the relatively poorer countries, and among firms that are traditionally known to be more favorable towards female employment – the relatively smaller firms, and firms in the garments and textiles industries vs. firms in rest of the manufacturing sector. 

These are but some examples to draw links between the dimension of institutions and laws and the gender dimension of economic development. Quite simply laws have a great impact on women labor participation.

I encourage interested colleagues to further study the relationships between laws and women’s experience in the private sector.


Mohammad Amin

Private Sector Development Specialist

David Francis

World Bank Enterprise Analysis Unit

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