Unequal Laws and the Disempowerment of Women in the Labour Market: Evidence from Firm-Level Data

Abstract

Institutions are defined as the set of rules that govern human interactions. When these rules are discriminatory, they may disempower segments of a population in the economic spheres of activity. In this study, we explore whether laws that discriminate against women influence their engagement in the economy. We adopt a holistic approach where we explore an overall measure of unequal laws also known as legal gender disparities and relate it to several labour market outcomes for women. Using data for over 59,000 firms across 94 economies, we find that unequal laws not only discourage women’s participation in the private sector workforce, but also their likelihood to become top managers and owners of firms. Suggestive evidence indicates that access to finance, property ownership, business registration, and labour market constraints are pathways by which legal gender disparities disempower women in the private sector.

Acknowledgements

We would like to thank Jorge Rodriguez Meza as well as two anonymous reviewers for comments. The authors are also grateful to Alena Sakhonchik for research assistance. Feedback from participants from the 2nd IZA Workshop on Gender and Family Economics and the Society of Labor Economists (SOLE) Twenty-Third Annual Meetings were invaluable. We would also like to thank Rita Ramalho and Sarah Iqbal for their support.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. More information about the ES methodology and country coverage is available on the Enterprise Surveys website http://www.enterprisesurveys.org. Note that each firm has only one observation in the sample.

2. Further details can be found in Iqbal et al. (2016).

3. Table A1 lists the regions. Due to data limitations, we do not capture possible regional differences in the implementation of the gender laws as well as regional differences in some of our explanatory variables such as religious composition, income levels, and so forth that may influence our results. We would like to thank an anonymous referee for pointing this out.