Poverty and income inequality

Poverty Income Inequality and Female Labor Market Participation
1.0. Introduction
1.1. Problem Statement
Today's global inequality and poverty is an outcome of two successive centuries of unequal progress, and eradication remains one of the greatest global challenges. The 2020 Global Multidimensional Poverty Index (MPI) identified that 22 percent of the world population (1.3 billion people) live with multi-dimensional poverty, with 42 percent living in Sub Saharan Africa and 41 percent living in South Asia. Every multidimensionally poor person is deprived of multiple poverty indicators which include health, education, and standards of living indicators, which include cooking fuel, drinking water, sanitation, electricity, housing, and asset ownership (UNDP, 2020). The different levels of poverty and income inequality are a manifestation of differences in gender labor participation. According to the International Labor Organization estimates, the women labor force participation rate of 49% is disproportionately lower than the men labor force participation rate of 75% and the world labor force participation rate 62 %, implying that more women are predisposed to multi-dimensional poverty due to unemployment (ILO, 2017). The pervasiveness of the gender gaps in the labor market necessitates key policy intervention. To address the women's labor participation gaps, key policy intervention is social protection policies such as flexible working environments, childcare support, various forms of leave. Gender-specific social protection interventions that address vulnerabilities and inequalities have been identified as pivotal policy actions for addressing poverty reduction and income inequality, particularly gender parity inequalities.
1.2. Background Information
The exclusion of women from the labor market hinders an economy's full potential for economic development. Empirical evidence demonstrates that women's participation in the labor market is fundamental in inclusive economic growth (Cipollone et al., 2014). An analysis of the European Union estimates 2.8% of the EU's Gross Domestic Product (GDP) (€370 billion) as the total cost of a lower female employment rate. The low participation of women in the formal labor market is complemented by their over-representation in low productivity informal sectors that have no defined labor protection legislation policies and social security policies, resulting in overall lower rates of social security coverage among women.
Globally the population of women participating in the formal market remains comparatively low. Overall, the world recorded a decline in the global female labor force participation rate (age group 15+), decreasing to 48.5% by 2018 from 51.3%. There exists a high disparity in female labor participation, with the middle east recording the least female labor force participation while East Asia records the highest female labor participation rate. Notably, North Africa, Latin America and Caribbean, and Sub Saharan Africa recorded an increase in female labor participation rate with the other regions recording a decline (Figure 1 below).
Figure 1: Estimates of Female Labor Force Participation Rates (15+ years)
Globally, only 35 countries have realized gender parity in education, with developing countries having low education attainment for the girls. Worldwide, it's estimated that 1 in every ten girls aged 15-24 is illiterate. The underrepresentation of women in highly skilled subjects such as Science, Technology, and Mathematics (STEM) constraints their wage earnings. Women remain underrepresented in political, social, and corporate leadership. Women hold only 20% of the board director positions globally, and 36% of the public sector official and private sector managers (ILO, 2016). The International Labor Organization identifies social norms and structural barriers are the main contributing factors to the gender wage gap. Societal defined gender roles such as caregiving, which disproportionately falls on women, constrain female participation in the labor market. It's estimated that across OECD, women spend an average of 3-6 hours in unpaid care while men spend 0.5-2 hours in unpaid care (ILO, 2017). The extant literature demonstrates that addressing the gendered barriers to market participation has positive effects on the female labor market participation. Child grants transfers to finance daycare expenses, for example, incentivize the re-entry of women into the labor market (Cipollone et al., 2014).
Social protection programs have been identified to address the gender imparity gap in the labor market Raihan & Jahan (2018). Social protection promotes inclusive growth through multiple channels; accumulation of productive assets, buffer against shocks that result in loss of productive capital, and enabling innovation and entrepreneurship. By lifting credit constraints through the facilitation of bank loans and credit to the society cadre with no access to traditional collateral, social protection results in increased investment. Social protection interventions buffer households against adverse shocks that would otherwise affect household consumption patterns. Lastly, social protection enhances household time and resource allocation yielding income gains and resulting in positive welfare outcomes such as investment in education and health (OECD, 2019).
2.0. Literature Review
2.1. Introduction
The interplay between gender disparity in the labor market and economic development remains a key area of research interest in academic literature and constantly attracting policy debates. Using A cross-section econometric model to analyze the causality between social protection and labor force participation behavior in Bangladesh, Raihan & Jahan (2018) identify a higher female labor participation rate among women or households with access to social protection programs. The study, for example, identifies that social protection interventions that reduce the burden for caregiving among the female household members increase the disposable time and resources, which accelerates labor force participation. The Raihan & Jahan (2018) findings are similar to Ntuli (2014), whose analyses identified that social security funds such as childcare grants, disability grants, and pensions positively influence the women's participation in the labor market in South Africa. Similarly, Cipollone et al. (2014)identified that a high level of social protection contributes to a significant contribution to women's labor market participation in 15 European Union member states.
2.2. Meta-Analytic Review of Literature
Raihan & Jahan (2018) employs the Bangladesh Household Income Expenditure Survey (HIES) data of 2005 and 2010. It creates two dummy variables: the participation variable, which represents the individual participation in the social protection program, and a coverage variable, which represents the share of the social protection income against the total household income. Cross-section logistic regression results by Raihan & Jahan (2018) identify that female adult who is beneficiaries of social protection were 2.25 times more likely to engage in the labor force in 2010, increasing from 1.99 times in 2005 implying positive effects of the social protection programs in Bangladesh. The results further indicate that a 1% increase in the social protection coverage variable resulted in the 1.08-time likelihood of female labor participation in 2010, increasing from 1.02 times in 2005. To establish the validity of the results, Raihan & Jahan (2018) undertook a confirmatory factor analysis of a Chi-square test.
Ntuli (2007) applies survey logit models to estimate the determinant of female labor market participation in South Africa for the period 1995-2004 using the 1995 Household Survey and the 2004 Labor Force Survey. The analysis considers the working age of females aged between 15 and 65 years. The analysis identifies that provision of non-labor income such as social grants would yield a 0.25% (broad definition) and 0.07 % (strict definition) increase in the likelihood of women participating in the labor market. The results indicate that the likelihood is higher with increasing urbanization.
Cipollone et al. (2014) examine the women's participation patterns across 15 EU countries over two decades utilizing EU-SILC (European Union Statistics on Income and Living Conditions) and ECHP (European Community Household Panel) databases. The analysis adopts a standard probit model for female labor supply. The analysis identifies that social constructs that result in gendered roles such as family care burdens negatively affect the female labor market participation rates with women with a child less than five years old, less likely to be engaged in the labor market. Cipollone et al. (2014) identify that 25 % of the overall women's participation in the labor market was mainly attributable to change in institutional frameworks and social protection policies in the respective countries. The analysis, however, identifies that the impact has been disproportionate for low skilled women.
A cross-cutting limitation of the studies by Raihan & Jahan (2018); Cipollone et al. (2014), and Ntuli (2007) is the failure to consider the quality of jobs that the women participate in. Moreover, the studies mainly focus on the positive outcome of the social protection programs with minimal focus on the unintended negative consequence of the interventions. Moreover, the data sets adopted are national surveys that do not enable the monitoring of individual behaviors that would be critical in informing the social protection policies. Lastly, the studies do not control for endogeneity of fertility, non-labor income, and marital status, whose exclusion limits the basis for objectively analyzing the impact of social protection.
Reliability, validity, and biases test are critical in identifying the efficacy of the instrument measures employment in a study. To test for robustness, the results are interpreted at 5% and 1% significant levels implying that the results reject the null hypothesis that social protection intervention does not contribute to increased labor market participation rates. To establish validity, Raihan & Jahan (2018) undertook a Pseudo R^2 test, which explains how well the model explains the hypothesized phenomenon. The pseudo" R2 is a measure of the reduction of the "error variance." With an outcome of less than 0.5 implying the need, the Pseudo R^2 indicates that the variance is explained by other variables, not in the model, hence the need for revision of the independent variables considered on the analysis.
Ethical Outcome of Research
Researchers are faced with the ethical dilemma of emphasizing positive results over the negative results (Cipollone et al., 2014). While unexpected, negative, or null results from the analysis may be indicative of unsuccessful research or errors in the research design, which would potentially ruin the reputation of the researcher, disseminating such results is critical for shaping new research and generating more scientific knowledge. Moreover, failure to disclose the nonconventional results would perpetuate erroneous conclusions. A possible negative ethical outcome of the proposed social protection intervention is that the overall cost of the intervention outweighs the anticipated aggregate increase in women labor market participation. Failure to disclose such an outcome would result in the perpetual implementation of the social protection interventions that would have a negative long-term impact on economies.
Discussion & Conclusion
Empirical evidence demonstrates that women's labor participation rates could be increased through social protection programs. In addition to increased women participation, social protection contributes to positive health care and education outcomes for the household members, which positively contributes to intertemporal welfare gains such as human capital formation. It's, however, critical that the policy interventions are designed to buffer against intended effects such as inducing beneficiaries from labor participation to be fit the eligibility criteria for social protection programs, which has a negative and long-term socio-economic impact.
Women account for almost 50% of the world's working-age population. Yet, only 49% of the women participate in the formal labor market (ILO, 2017), which imposes a high cost to the global economy. Empirical evidence demonstrates that gender parity in the labor market contributes to welfare gains through increased consumption, increased productivity implying the need for social protection policy intervention to address the gender vulnerabilities that outcome in the exclusion of women from the formal labor force.
References
Cipollone, A., Patacchini, E., & Vallanti, G. (2014). Female labor market participation in Europe: novel evidence on trends and shaping factors. IZA Journal of European Labor Studies, 3(1). https://doi.org/10.1186/2193-9012-3-18
ILO. (2016). Global Gender Gap Report. In Encyclopedia of Family Studies. https://doi.org/10.1002/9781119085621.wbefs350
ILO. (2017). World Employment Social Outlook. In Report. http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_579893.pdf
Ntuli, M. (2014). Determinants of South African Women' s Labour Force Participation, 1995- IZA DP No . 3119 Determinants of South African Women' s Labour Force Participation, 1995 – 2004 Miracle Ntuli October 2007 Forschungsinstitut Institute for the Study of Labor. November 2007, 1995–2004.
OECD. (2019). Measuring the impact of social protection on inclusive growth. In Can Social Protection Be an Engine to Inclusive Growth (pp. 21–37). OECD Publishing, Paris. https://doi.org/10.1787/a43dc9c3-en
Raihan, S., & Jahan, I. (2018). How Does Social Protection Affect Labor Force Participation in Bangladesh? South Asia Economic and Policy Studies. https://doi.org/https://doi.org/10.1007/978-981-13-2071-2_8
UNDP. (2020). Charting pathways out of multi-dimensional poverty?: Achieving the SDGs. 1–52. http://hdr.undp.org/sites/default/files/2020_mpi_report_en.pdf