Financial Development and Female Labor Income Share: Evidence from Global Data

Abstract

While there has been sizable literature on the effect of financial development on growth, inequality, and poverty, there are fewer studies on its impact on female labor force participation or women’s wellbeing. Using a novel dataset, this paper investigates the association between the dimensions of financial development and female labor income share for 156 countries for the period of 1991-2019 to contribute to the literature on the role of financial development in improving women’s wellbeing. The findings show that financial development is positively associated with women’s income in high-income countries but not in low-income countries. The main implication of the study is that financial development in poor countries is not sufficiently inclusive enough to create economic opportunities for women.

JEL classification:  E44, J16, 016

Keywords:  Financial development, Financial inclusion, Economics of gender, Gender inequality, Female labor force participation