Arab Monetary Fund Releases a Study on “The Determinants of Female Labor Force Participation in the Arab Countries”

07-10-2018

At the top of which economic growth, fertility rate, and female enrolment in higher education

Arab Monetary Fund Releases a Study on the Determinants of Female Labor Force Participation in the Arab Countries

In line with its continuous efforts to support decision-making process in the Arab countries, the Arab Monetary Fund (AMF) has recently released a study on the Determinants of female labor force participation in the Arab Countries. The study aims at identifying the major determinants that could increase female labor force in the region which is the lowest across the world. 

The study indicated that women’s economic empowerment is a major driver for economic growth and achieving Sustainable Development Goals. Studies indicated that moving towards reducing the gender gap could lead to an increase in the world GDP by between USD 12-28 trillion by 2025. It could also enable the developed countries mitigating the negative impact of an aging population on the labor market and it is the most important factor ever to reduce poverty in developing countries.

The AMF study focused on identifying the major determinants that affect female labor force participation in the Arab region during the period (1990-2016). Accordingly, the study reviewed the international empirical evidence. It indicated that economic determinants are considered as the essential factor influencing female labor force participation in many countries. The high GDP levels trigger the growth of the services sector and increase its contribution to the GDP. This sectoral shift in the GDP structure leads to higher female labor force participation levels as the services sector usually provides more convenient job for women. This phenomenon has been observed in many countries in which is called “the U curve hypothesis”. 

The study referred also to some other demographic, social, and institutional factors affect female labor force participation including the fertility rate and the female enrolment in higher education. The first factor affects negatively female labor force participation, while the second affects it positively. The higher the fertility rate, the lower the participation of females in the labor force. As when the number of children increases, it becomes difficult for the woman to achieve the required balance between family and work commitments. While the higher levels of female enrolment in higher education usually encourage them to participate actively in the labor market. Moreover, the empirical evidence confirms the importance of the institutional determinants in achieving a substantial increase in female labor force participation through family support policies and interventions that aim at increasing the labor market flexibility.

The gender gap is considered one of the most critical challenges that face the Arab economies. Within this context, the AMF study addressed the current situation of female participation in the education and labor market. The study indicated that although there is a notable increase in female enrolment rate in the primary education, there is a still a wide gender gap in accessing secondary and higher education.  This gap limits women’s ability to access the labor market which requires higher educational background and skills. 

Female labor force participation in the Arab region which stands at around 18.9 percent in 2017 is very low either compared with the world average (47.8 percent) or with some other geographical regions where it exceeds 50 percent. Additionally, the female unemployment rate stands at 16.7 percent which is three times the world average which adds more challenges that limit female participation in the labor market. 

As women’s economic empowerment is one of the most important factors that could help Arab economies to increase economic growth and achieve the Sustainable Development Goals, the Arab governments have adopted many strategies and initiatives that aim at reducing gender gap and increasing female labor force participation. These initiatives seek to provide more job opportunities to women particularly those in rural and remote areas or those within the vulnerable segments. Some Arab countries have also focused on amending laws, regulations and business environments to help more females get involved in the labor market.

The AMF study used descriptive and principal components analysis, in addition to some econometric models to identify the determinants that could significantly explain female labor force participation in nineteen Arab countries for the period (1990-2016).  The main results are as follows:

- Supporting the hypothesis of the U-shaped relationship between female labor force participation and economic growth in the Arab countries. Female labor force participation rises as income per capita increases, and when there is a shift in the GDP structure towards more contribution of the services sector which provides convenient jobs for female. 

- Female labor force participation in the Arab region is affected by economic, institutional, demographic, and social determinants. However, the group of economic and institutional determinants can explain around 51 percent of the phenomena, particularly income per capita which is the most influential factor within this group of determinants.

- Demographic determinants came second, and it is responsible for explaining 28 percent of the phenomena. Fertility rate which affects negatively female labor force participation is the most significant factor within this group.

- Social determinants also have an important role as they explain around 21 percent. Enrolment in higher education has a significant positive impact on female labor force participation in the Arab region.

Considering the challenges that face the Arab economies and the potential implications of the Fourth Industrial Revolution which will lead to a widening gender gap, Arab governments are encouraged to intensify and fostering their efforts towards empowering women. Accordingly, the AMF study involved some policy recommendations including:

- Empowering women through adopting national strategies that aim at increasing female labor force participation.

- Focusing on increasing women enrolment in high-quality university education tailored to enrich the skills of the Arab woman in Science, Technology, Engineering, and Mathematics (STEM) which are the most required fields for the job market in the future.

- Providing the required technical and vocational training necessary for women to access the labor market and eliminating female digital illiteracy.

- Leveraging ICT technologies to increase women's economic empowerment levels and facilitate their access to the knowledge economy.

- Integrating women entrepreneurship dimension within the SMEs policies and increasing female access to finance. 

- Reviewing legal frameworks to support women's rights. 

- Encouraging institutions to provide more female-friendly jobs by increasing the flexibility of the labor markets and business environments. In this context, part-time jobs and distance work proved to be very successful in increasing female labor force in many countries among which European countries and Japan.

- Providing more job opportunities for females in remote areas, or those who belong to vulnerable groups and overcoming the obstacles they face in accessing the labor market. 

 

A full version of the study is available at

http://www.amf.org.ae

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