Female labour force participation and inequality Gains from closing the gender gap in participation for the Turkish economy

Abstract

Low female labour force participation is among the main labour market problems as failing to integrate millions of women in labour markets affects allocation of resources and entails under-utilization of the human capital of a country. Low participation widens income inequality across genders and has implications on social norms. While the relationship between female labour force participation and economic growth has received substantial attention in the last decades, how it contributes to reduction in household inequality is largely overlooked. This chapter is the first to investigate the relationship between female labour force participation and inequality for Turkey which has the lowest female participation in the OECD as well as when compared to many other Muslim countries. Using instrumental variables, we empirically establish the causal impact of female labour force participation on intra-household income inequality in Turkey and investigate how much inequality would improve with increased participation. Estimations suggest that all else being equal, having at least one female member active in the labour market reduces intra-household income Gini on average by about 0.25. If all women who are out of education and inactive were employed at the prevailing wage rates by education, mean intra-household Gini would decline from 0.47 to about 0.26.