NBER WORKING PAPER SERIES
THE CAUSES AND CONSEQUENCES OF INCREASED FEMALE EDUCATION
AND LABOR FORCE PARTICIPATION IN DEVELOPING COUNTRIES
Rachel Heath
Seema Jayachandran
Working Paper 22766
http://www.nber.org/papers/w22766
NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138
October 2016, Revised August 2017
Prepared for inclusion in the Oxford Handbook on the Economics of Women, ed. Susan L.
Averett, Laura M. Argys and Saul D. Hoffman. (New York: Oxford University Press.
Forthcoming, 2018). We thank Alejandro Favela for excellent research assistance and Pinar
Keskin and Rafael Santos for very helpful comments. The views expressed herein are those of the
authors and do not necessarily reflect the views of the National Bureau of Economic Research.
NBER working papers are circulated for discussion and comment purposes. They have not been
peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies
official NBER publications.
© 2016 by Rachel Heath and Seema Jayachandran. All rights reserved. Short sections of text, not
to exceed two paragraphs, may be quoted without explicit permission provided that full credit,
including © notice, is given to the source.
The Causes and Consequences of Increased Female Education and Labor Force Participation
in Developing Countries
Rachel Heath and Seema Jayachandran
NBER Working Paper No. 22766
October 2016, Revised August 2017
JEL No. J16,O15
ABSTRACT
Two important recent trends in most developing countries have are the rise in female labor force
participation and the closing of gender gaps in school enrollment. This article begins by exploring
the causes of the increases in female education, which include greater job availability and policy
interventions that have promoted girls’ education. The article then explores the causes of
increased female employment, which include a sectoral shift from “brawn-based” industries to
services, as well as policies that have increased girls’ education. The article also discusses the
effects of these increases in female education and labor supply, particularly for the well-being of
women.
Rachel Heath
Department of Economics
University of Washington
Box 353330
Seattle, WA 98103
rmheath@uw.edu
Seema Jayachandran
Department of Economics
Northwestern University
2211 Campus Dr
Evanston, IL 60208
and NBER
seema@northwestern.edu
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1. Introduction
Two important recent trends in most developing countries are the rise in female labor force
participation and the closing of gender gaps in school enrollment. In this article, we explore
both the causes and the effects that they have had on the lives of women. A central theme that
emerges is the relationship between the two phenomena: as increases in education have
prompted more women to enter the labor force, improved labor market opportunities have also
prompted increases in female education.
We begin by exploring the causes of the increases in female education. In addition to the role of
greater job availability, we also discuss policy interventions that have promoted girls’
education. Recent evidence indicates that providing cash or in-kind benefits to parents who
keep their daughters in school, building schools or improving facilities, and developing
programs to reduce general gender disparities can all lead to increases in girls’ education.
We then turn to the causes of increased female employment. Against the backdrop of the well-
known theory that female labor supply is U-shaped in development (Boserup, 1970; Goldin,
1995; Mammen and Paxson, 2000), we provide evidence both that poor countries are moving
along the U-shaped curve as they develop and that the curve has shifted over time. Low-income
countries are on the downward-sloping portion of the empirically-estimated U-shaped curve,
which would suggest that their female employment rate would be declining as their economies
grow. However, we show that the U-shaped curve has been shifting upward in recent decades:
female labor force participation has increased, conditional on a country’s income. The net effect
of movement along the curve and the shift in the curve is that even the poorest countries in the
world have generally experienced rising female employment. Some of the employment growth
has been generated by a sectoral shift from “brawn” to services, which is occurring earlier in the
development trajectory than predicted by the U-shape. We also argue that policies that have
increased girls’ education have contributed to the upwards shift. Furthermore, we cite evidence
that programs seeking to improve women’s earning potential (such as microfinance or business
skills training) or to reduce the burdens of home production (such as free child care) have had
some success in increasing female labor supply. If these programs are adopted on a large-scale,
they could contribute to a further shift upwards.
In the second half of the article, we document the effects of these increases in education and
labor supply. In addition to increased labor supply, there is considerable evidence that female
education delays fertility and leads to healthier children once a woman has them. There is some
evidence, although it is less extensive, that women with more education marry later and on
better terms, and are healthier themselves.
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We conclude by discussing the effects of increased labor supply on women. We present
research that shows that job availability increases women’s bargaining power, even if they do
not work themselves. At the same time, holding constant job availability, working itself leads to
even greater increases in women’s bargaining power and children’s health. While these
outcomes both represent improvements in women’s utility and are frequent policy goals, we
also discuss evidence that there may also be concurrent increases in domestic violence or
reductions in women’s leisure time that make the net effect for women’s welfare less clear.
2. Determinants of female education and labor supply
2a. Determinants of increases in education
There is a pronounced male bias in educational attainment at low levels of economic
development, which is absent among richer societies. Figure 1 shows the relationship between
gender gaps in education and development by plotting the female-to-male ratio in secondary
school enrollment rates in countries around the world against GDP per capita. The ratio is
below 1 in most poor countries – meaning that female enrollment is lower than male enrollment
-- but in richer countries there is gender parity or, in fact, female enrollment exceeds male
enrollment.
The pattern seen in the cross-section of countries is also seen over time in most poor countries as
their economies grow: girls’ education increases at a faster rate than boys’, narrowing the
gender gap. Figure 2 plots the trend in secondary school completion rate for females relative to
males among low-income countries in Sub-Saharan Africa and Asia. While education levels for
both genders have been rising over time (not depicted in the figure), the growth is more rapid
for females as indicated by the increasing ratio female-to-male education ratio.
Economic forces affecting female education
There are several potential reasons for the rise in female education and, more specifically, the
faster rise in female than male education. First, if the female employment rate is rising and
education confers benefits in the labor market, then forward-looking families will invest more
in girls’ education over time. Should families in developing countries be anticipating a rising
female employment rate? Female employment could increase with development for many
reasons, as discussed in Jayachandran (2015) and briefly reviewed here. As economic activity
shifts away from “brawn-based” work and toward “brain-based” work, such as in the services
sector, female workers gain a comparative advantage (Pitt, Rosenzweig, and Hassan, 2012).
Reductions in fertility, better control over the timing of fertility, and improvements in maternal
health also increase women’s time in the labor market (Jayachandran and Lleras-Muney, 2009;
Miller, 2010). While there are also some potential channels through which female employment
might instead decrease with development -- as discussed in the next section -- we also show
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that the positive channels have dominated negative channels in a majority of countries, so that
female employment has indeed risen in most countries over the past 20 years.
There are also other channels besides female employment that could be driving the rise in girls’
education that accompanies economic development. The opportunity cost of schooling might
fall due to decreases in parents’ fertility and in the time-intensity of home production: girls’
time that they had spent caring for siblings or doing household chores is freed up, enabling
them to stay in school longer.
These explanations do not rest on any societal favoritism toward boys. However, part of the
gender gap in education may very well reflect favoritism. Thus, another potential explanation
for the rising education of girls is that educating children has consumption value for parents,
with girls’ education more of a luxury good than boys’ education; with rising family incomes,
spending on girls begins to catch up to spending on boys. In addition, economic development
might alter preferences and reduce gender-biased attitudes. Stated gender bias tends to be
negatively correlated with economic development, although we do not have causal evidence
that economic development systematically ameliorates gender-biased attitudes (Jayachandran,
2015).
Gender-focused policies affecting female education
In addition to the economic forces that accompany development leading to more female
education, there are many policies directed at increasing female education that have been put in
place in recent decades. One type of policy involves school infrastructure. Building more
schools could be a girl-friendly policy if parents are more sensitive to travel distance when
deciding to send girls to schools (Burde and Linden, 2013). Similarly, building toilets in schools
might be more important for girls’ enrollment than boys’ (Adukia, forthcoming). Many
developing countries have eliminated school fees for primary schools, and such a policy might
especially help girls if parents were reluctant to invest money in their education.
Another type of policy to increase girls’ education is conditional cash transfers (CCTs).
Prominent programs such as Oportunidades in Mexico pay families a larger amount to keep
their daughters in school than their sons, under the view that a larger amount is needed to
induce them to educate a daughter than a son, and some CCTs only target girls (Schultz, 2004).
An in-kind CCT in India gives bicycles to girls who remained in secondary school; such a policy
both provides an incentive to remain in school and makes traveling to school faster and safer.
This program increased female secondary school enrollment by 30% in the state of Bihar, and
the authors attribute most of the effect to the reduced travel time and increased safety, rather
than the cash-equivalent incentive effect (Muralidharan and Prakash, 2013) .