Impact of economic crises on female labor force participation

Since the 1960s female labor force participation rates (LFPR), female LFPR, have been increasing world wide with a few exceptions. There are several reasons of this, such as increase in women’s education levels, declining fertility, increase in marriage age, increased employment opportunities and several other factors which have contributed to this trend. Apart from those factors, in recent years as the frequency of financial and economic crises increased both in developed and developing countries, the effect of crises on female LFPR also gained importance.

The aim of this paper is to investigate the effect of the economic crises on the female LFPR for the period 1997-2017 by using the index of Global Economic Policy Uncertainty (GEPU); a new method to measure economic policy uncertainty and test its dynamic relationship with output, investment, and employment. The index covers 19 countries: Australia, Brazil, Canada, Chile, China, France, Germany, India, Ireland, Italy, Japan, Mexico, the Netherlands, Russia, South Korea, Spain, Sweden, the United Kingdom, and the United States. After a review of the existing literature and recent data on labor market dynamics with an emphasis on female labor supply, econometric analysis will be performed on the impact of economic crises on female LFPR and female unemployment. In the existing literature there are two main hypotheses on the impact of economic crises on female LFPR; "added workers hypothesis" and "discouraged workers hypothesis". In the paper those two hypothesis will be tested using panel data (fixed and random effects) analysis. In particular, the panel causality tests developed by Holtz-Eakin, Newey, and Rosen (1988) will be performed.