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Ghimire, S.; , .; Valeva, A. Globalization and Female Employment. Encyclopedia. Available online: https://encyclopedia.pub/entry/22324 (accessed on 20 July 2024).
Ghimire S,  , Valeva A. Globalization and Female Employment. Encyclopedia. Available at: https://encyclopedia.pub/entry/22324. Accessed July 20, 2024.
Ghimire, Shankar, , Anna Valeva. "Globalization and Female Employment" Encyclopedia, https://encyclopedia.pub/entry/22324 (accessed July 20, 2024).
Ghimire, S., , ., & Valeva, A. (2022, April 27). Globalization and Female Employment. In Encyclopedia. https://encyclopedia.pub/entry/22324
Ghimire, Shankar, et al. "Globalization and Female Employment." Encyclopedia. Web. 27 April, 2022.
Globalization and Female Employment
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This entry is adapted from the peer-reviewed paper 10.3390/world3020011

Globalization can be viewed as a world integration leading to an exchange of ideas in different cultural, economic, political, technical, and social spheres across countries. Globalization’s impact on the receiving country’s economic and employment outcomes is an established phenomenon. However, globally only about 55 percent of women participate in the labor force compared to 80 percent for men. These gender disparities serve as an important focal point for research related to female employment, as it has a significant positive association with overall socio-economic outcomes.

female participation in labor force (FPLF) foreign direct investment (FDI) system GMM

1. Introduction

Globalization can be viewed as a remarkable world integration leading to an exchange of ideas in different cultural, economic, political, technical, and social spheres. Globalization’s impact on the receiving country’s economic outcomes is an established phenomenon. One of the noticeable impacts, as illustrated in the existing literature, is the connection between globalization and women’s economic outcomes [1][2][3][4] (Chopra, 2019; Okþak & Koyuncu, 2017; Wacker et al., 2017; Maqsood, 2014). However, globally only about 55 percent of women participate in the labor force compared to 80 percent for men. These gender disparities serve as an important focal point for research related to female employment, as it has a significant positive association with overall socio-economic outcomes [3].
Numerous studies attempt to understand the forces that improve women’s economic outcomes. For instance, Tasseven et al. [5] found that GDP per capita, unemployment rates, and fertility rates significantly affected women’s employment. Urbanization, FDI, GDP per capita, and economic growth are the most significant contributors to improving gender equality and education [6]. Abdulloev et al. [7] further demonstrated that, by acquiring higher education, females could significantly reduce gender gaps. Similarly, information and communication technology, law, and order also influenced females’ status in Pakistan [6]. While multiple factors affect women’s employment, this entry particularly focuses on the relationship between globalization and female participation in the labor force (FPLF), as this is an underexplored issue in the literature.

2. Literature Review on Globalization and Female Employment

While globalization may seem an immeasurable concept, Maqsood [2] determined that it is significantly driven by the factors of production, FDI, and trade flows. Therefore, expanding FDI serves as a reasonable proxy for rising economic globalization. A very large body of research investigates the relationship between FDI, trade, and gender economic disparities. It is generally believed that increased globalization creates job opportunities for females and reduces gender disparities, although different countries and regions experience heterogeneous effects. Technology and trade have contributed to Turkey’s employment creation, and FDI implied an absolute skill bias [8]. Both push factors (unemployment) and pull factors (trade liberalization) have influenced Brazilian women to join the labor market [9]. Chopra [1] showed that FDI inflows significantly and positively affected women’s empowerment and increased women’s welfare. FDI and urbanization have boosted FPLF, particularly in the SAARC region. FDI has encouraged women’s employment opportunities in the telecommunication, services, and pharmaceuticals sectors [2].
The aggregate empirical analysis of globalization, particularly FDI inflows and the country’s domestic gender wage gap, is inconclusive [10]. For instance, Vijaya and Kaltani [11] found that female salaries and manufacturing wages were negatively correlated with FDI net inflows. This reduced female labor’s bargaining power due to the global economy’s arrangement, in which countries invest in more convenient conditions. Ouedraogo and Marlet [12] found a positive association between FDI inflows and gender development but a negative correlation between FDI and gender inequality. This relationship was stronger in Sub-Saharan Africa, the Middle East and North Africa, Latin America, and middle-income countries. This implies that, while expanded FDI may increase economic opportunities for women, it does so less than proportionately. Similarly, Cooray et al. [13] analyzed the effect of trade openness and political institutions on female employment in 48 countries of Sub-Saharan Africa from 1985–2012. They found that, while political institutions played a crucial role in enhancing trade openness, and trade liberalization could generate more employment opportunities and economic efficiency, the benefits fell more heavily on men. Bussmann [14] further demonstrated the nuances in understanding globalization’s impacts, as he demonstrated that trade deficits were positively correlated with FPLF in developing countries but negatively associated with FPLF in OECD countries. Along with discrepancies by gender and region, the economic benefits from globalization also vary by age, as seen in Wacker et al. [4]. They investigated the link between trade and FDI on female employment with a panel of 80 developing countries from 1990–2005, and demonstrated a negative association between globalization (FDI/trade) and FPLF. Their results were more substantial for young groups, as globalization generates a robust incentive to invest more in education, thereby delaying labor force participation. Although the general belief that globalization positively promotes overall labor force participation holds throughout the literature, the distribution of these benefits varies significantly by gender, region, age, and other factors.
According to Fruttero et al. [15], fiscal policy plays an influential role in reducing gender gaps. Changing the unit of taxation produces a potentially high long-term return on FPLF for all women. Providing cash transfers to poor (low-skilled) women in the labor force, along with higher spending on education and infrastructure with higher returns, encourages female participation in low-income countries. Moreover, subsidizing child care and paid maternity leave in advanced economies increases FPLF. Klasen [16] found that economic growth, fertility decline, and an expansion of female education promoted FPLF in developing countries. This trend was heterogenous across Latin America, the Middle East, South Africa, and other regions. They also found household economic conditions, the nature of stigmas against working outside for educated women, the legacy of socialism, care burdens (children and elderly), and values played a significant role in promoting FPLF. Social norms have also played a role in constraining FPLF in Saudi Arabia [17]. A low level of FPLF observed in the Near and Middle East has been connected with some aspects of Arab culture that are not directly related to Islam [18]. Prior research by Deseran et al. [19] examined how labor markets, household composition, and individual characteristics affected women’s participation in the labor force.
Similarly, by observing 31 provincial units in mainland China and 11,754 households, Chen and Ge [20] found that social norms were responsible for a continuing decline in FPLF in urban China. They also found that the FPLF of married women with non-working mothers-in-law was 5 to 18 percentage points lower than that of married women with working mothers-in-law in urban China. Though female educational attainment has been rising in the Middle East and North Africa (MENA) region, FPLF remains stagnant [21]. Assaad et al. [21] found that this paradoxical relationship could be primarily attributed to the change in opportunity structures facing educated women in the MENA region in the 2000s, rather than the supply-side factors traditionally emphasized in the literature.
Improvements in the business climate, trade openness, and FDI generate employment opportunities for female labor. Multinational corporations can easily hire the cheapest female workers from countries with emerging economies, thus increasing FPLF [9][22][23]. On the other hand, FPLF may be negatively associated with trade openness and FDI inflows, as globalization promotes a competitive business environment in the receiving country [2]. Low-income countries have received a large share of FDI in the primary sector, which relies on physical human capital [12]. To compete in this sophisticated globalized world, countries have raised the level of their labor force skills by investing more in young women’s education and, hence, reducing their labor market participation [4]. In Southeast Asia, FDI inflows have negatively impacted gender development, as these countries have received a plethora of investments in the technological sector, which relies predominately on skilled labor, thus benefiting male labor [12].

References

  1. Chopra, C. Does Foreign Direct Investment Boost up Women Empowerment: A Panel Data Analysis of Developed and Developing Countries. Wealth Int. J. Money Bank. Financ. 2019, 8, 83–91.
  2. Maqsood, F. Impact of Globalization on Female Labor Force Participation in the SAARC Region. Pak. J. Soc. Sci. (PJSS) 2014, 34, 523–533.
  3. Okþak, Y.; Koyuncu, J.Y. Does globalization affect female labor force participation: Panel evidence. J. Econ. Bibliogr. 2017, 4, 381–387.
  4. Wacker, K.M.; Cooray, A.; Gaddis, I. Globalization and Female Labor Force Participation in Developing Countries: An Empirical (Re-)Assessment. In Globalization; Christensen, B.J., Kowalczyk, C., Eds.; Springer: Berlin/Heidelberg, Germany, 2017; pp. 545–583.
  5. Taşseven, Ö.; Altaş, D.; Turgut, Ü.N. The determinants of female labor force participation for OECD countries. Uluslararası Ekon. Araştırmalar Derg. 2016, 2, 27–38.
  6. Sajid, S. Political Economy of Gender Equality: Case Study of Pakistan. Int. J. Gend. Women’s Stud. 2014, 2, 33.
  7. Abdulloev, I.; Gang, I.N.; Yun, M.-S. Migration, Education and the Gender Gap in Labour Force Participation. Eur. J. Dev. Res. 2014, 26, 509–526. Available online: https://econpapers.repec.org/paper/ostwpaper/342.htm (accessed on 29 September 2021).
  8. Meschi, E.; Taymaz, E.; Vivarelli, M. Globalization, technological change and labor demand: A firm-level analysis for Turkey. Rev. World Econ. 2016, 152, 655–680.
  9. Gaddis, I.; Pieters, J. Trade Liberalization and Female Labor Force Participation: Evidence from Brazil. 2012. Available online: https://ftp.iza.org/dp6809.pdf (accessed on 5 November 2021).
  10. Carr, S. Investing in Equality: A Case for Motivating Gender Empowerment through Foreign Direct Investment. Doctoral Dissertation, Georgetown University, Washington, DC, USA, 2016.
  11. Vijaya, R.M.; Kaltani, L. Foreign direct investment and wages: A bargaining power approach. J. World-Syst. Res. 2007, 83–95.
  12. Ouedraogo, R.; Marlet, E. Foreign Direct Investment and Women Empowerment: New Evidence on Developing Countries. IMF Work. Pap. 2018, 18, 1.
  13. Cooray, A.; Dutta, N.; Mallick, S. Trade Openness and Labor Force Participation in Africa: The Role of Political Institutions. Ind. Relat. A J. Econ. Soc. 2017, 56, 319–350.
  14. Bussmann, M. The Effect of Trade Openness on Women’s Welfare and Work Life. World Dev. 2009, 37, 1027–1038.
  15. Fruttero, A.; Gurara, D.; Kolovich, M.L.; Malta, V.; Tavares, M.M.; Tchelishvili, N.; Fabrizio, M.S. Women in the Labor Force: The Role of Fiscal Policies; International Monetary Fund: Washington, DC, USA, 2020.
  16. Klasen, S. What Explains Uneven Female Labor Force Participation Levels and Trends in Developing Countries? World Bank Res. Obs. 2019, 34, 161–197.
  17. Bursztyn, L.; González, A.L.; Yanagizawa-Drott, D. Misperceived Social Norms: Female Labor Force Participation in Saudi Arabia (No. w24736); National Bureau of Economic Research: Cambridge, MA, USA, 2018.
  18. Korotayev, A.V.; Issaev, L.M.; Shishkina, A.R. Female Labor Force Participation Rate, Islam, and Arab Culture in Cross-Cultural Perspective. Cross Cult. Res. 2015, 49, 3–19.
  19. Deseran, F.A.; Li, J.H.; Wojtkiewicz, R.A. Householdstructure, labor market characteristics, and female labor forceparticipation. In Inequalities in Labor Market Areas; Routledge: London, UK, 1993; pp. 165–190.
  20. Chen, X.; Ge, S. Social norms and female labor force participation in urban China. J. Comp. Econ. 2018, 46, 966–987.
  21. Assaad, R.; Hendy, R.; Lassassi, M.; Yassin, S. Explaining the MENA paradox: Rising educational attainment yet stagnant female labor force participation. Demogr. Res. 2020, 43, 817–850.
  22. Richards, D.L.; Gelleny, R. Women’s Status and Economic Globalization. Int. Stud. Q. 2007, 51, 855–876.
  23. Seguino, S.; Grown, C. Gender equity and globalization: Macroeconomic policy for developing countries. J. Int. Dev. J. Dev. Stud. Assoc. 2006, 18, 1081–1104.
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Subjects: Economics
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Shankar Ghimire
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Anna Valeva
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