Financial Development and Female Labor Income Share: Evidence from Global Data
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Jun 13, 2022
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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
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Elveren, A. and Kırmızıoğlu, H. (2022) “Financial Development and Female Labor Income Share: Evidence from Global Data”, World Journal of Applied Economics, 8(1), pp. 35-49. doi: 10.22440/wjae.8.1.3.
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References
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Arellano, M., & Bover, O. (1995). Another Look at the Instrumental Variable Estimation of Error Component Models. Review of Economic Studies, 68, 29-51. doi:10.1016/0304-4076(94)01642-D
Arnold, J., & Gammage, S. (2019). Gender and Financial Inclusion: The Critical Role for Holistic Programming. Development in Practice, 29, 965-973. doi:10.1080/09614524.2019.1651251
Asiedu, E., Kalonda-Kanyama, I., Ndikumana, L., & Nti-Addae, A. (2013). Access to Credit by Firms in Sub-Saharan Africa: How Relevant is Gender? American Economic Review: Papers & Proceedings, 103, 293-297. doi:10.1257/aer.103.3.293
Asongu, S. A., & Odhiambo, N. M. (2018). ICT, Financial Access and Gender Inclusion in the Formal Economic Sector: Evidence from Africa. Working Paper, African Governance and Development Institute.
Autor, D. H. (2015). Why Are There Still So Many Jobs? The History and Future of Workplace Automation. Journal of Economic Perspectives, 29, 3-30. doi:10.1257/jep.29.3.3
Autor, D. H., & Dorn, D. (2013). The Growth of Low Skill Service Jobs and the Polarization of the U.S. Labor Market. American Economic Review, 103, 1553-97. doi:10.1257/aer.103.5.1553
Balasubramanian, S. A., Kuppusamy, T., & Natarajan, T. (2019). Financial Inclusion and Land Ownership Status of Women. International Journal of Development Issues, 18, 51-69. doi:10.1108/IJDI-06-2018-0091
Belluci, A., Borisov, A., & Zazzaro, A. (2010). Does Gender Matter in Bank–firm Relationships? Evidence from Small Business Lending. Journal of Banking & Finance, 34, 2968-84. doi:10.1016/j.jbankfin.2010.07.008
Berik, G., Rodgers, Y. M., & Seguino, S. (2011). Feminist Economics of Inequality, Development, and Growth. In G. Berik, Y. M. Rodgers, & S. Seguino (Eds.), Inequality, Development, and Growth (pp. 1-33). Routledge, London and New York. doi:10.1080/13545700903093524
Blundell, R., & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87, 115-43. doi:10.1016/S0304-4076(98)00009-8
Bond, S., Hoeffler, A., & Temple, J. (2001). GMM Estimation of Empirical Growth Models. Working Paper, Centre for Economic Policy Research (CEPR).
Buvinic, M., & Furst-Nichols, R. (2016). Promoting Women's Economic Empowerment: What Works? The World Bank Research Observer, 31, 59-101.
Chen, G., & Chen, S. (2016). Financial Development, Labor Participation, and Employment in Urban China. Emerging Markets Finance and Trade, 52, 754-64. doi:10.1080/1540496X.2016.1116285
Connelly, R. (1992). The Effect of Child Care Costs on Married Women’s Labor Force Participation. Review of Economics and Statistics, 74, 83-90. doi:10.2307/2109545
Deléchat, M. C., Newiak, M. M., Xu, R., Yang, M. F., & Aslan, G. (2018). What is Driving Women’s Financial Inclusion Across Countries? Working Paper, International Monetary Fund.
Demirguc-Kunt, A., & Klapper, L. (2013). Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries. Brookings Papers on Economic Activity, 2013, 279-340.
Demirguc-Kunt, A., & Levine, R. (2009). Finance and Inequality: Theory and Evidence. Annual Review of Financial Economics, 1, 287-318. doi:10.1146/annurev.financial.050808.114334
Demirguc-Kunt, A., Honohan, P., & Beck, T. (2008). Finance for All? Policies and Pitfalls in Expanding Access. World Bank Policy Research Report.
Demirguc-Kunt, A., Klapper, L. F., & Singer, D. (2013). Financial Inclusion and Legal Discrimination against Women: Evidence from Developing Countries. World Bank Policy Research Working Paper.
Demirguc-Kunt, A., Klapper, L. F., Singer, D., & Van Oudheusden, P. (2015). The Global Findex Database 2014: Measuring Financial Inclusion around the World. World Bank Policy Research Working Paper.
Ellis, A., Cutura, J., Dione, N., Gillson, I., Manuel, C., & Thongori, J. (2007). Gender and Economic Growth in Kenya : Unleashing the Power of Women. World Bank, Washington DC.
Fernandez, R., Fogli, A., & Olivetti, C. (2004). Mothers and Sons: Preference Formation and Female Labor Force Dynamics. Quarterly Journal of Economics, 119, 1249-99. doi:10.1162/0033553042476224
Gornick, J. C., Meyers, M. K., & Ross, K. E. (1998). Public Policies and the Employment of Mothers: A Cross-National Study. Social Science Quarterly, 79, 35-54.
Hallward-Driemeier, M. (2013). Enterprising Women : Expanding Economic Opportunities in Africa. World Bank, Washington DC.
Han, R., & Melecky, M. (2013). Financial Inclusion for Financial Stability: Access to Bank Deposits and the Growth of Deposits in the Global Financial Crisis. Policy Research Working Paper, World Bank.
Kim, K. (2022). Assessing the Impact of Mobile Money on Improving the Financial Inclusion of Nairobi Women. Journal of Gender Studies, 31, 306-22. doi:10.1080/09589236.2021.1884536
Kirmizioglu, H., & Elveren, A. Y. (2022). Financial Development and Female Labor Income Share: Evidence from Global Data. MPRA Working Paper.
Kiviet, J. (1995). On Bias, Inconsistency, and Efficiency of Various Estimators in Dynamic Panel Data Models. Journal of Econometrics, 68, 53-78. doi:10.1016/0304-4076(94)01643-E
Klapper, L. F., & Parker, S. (2011). Gender and the Business Environment for New Firm Creation. The World Bank Research Observer, 26, 237-57.
Klasen, S. (2002). Low Schooling for Girls, Slower Growth for All? Cross-Country Evidence on the Effect of Gender Inequality in Education on Economic Development. World Bank Economic Review, 16, 345-73. doi:10.1093/wber/lhf004
Levine, R. (2021). Finance, Growth, and Inequality. IMF Working Paper.
Llussa, F. (2009). Financial Development, Gender and Entrepreneurship. MIT Engineering Systems Division Working Paper Series.
Morsy, H. (2020). Access to Finance – Mind the Gender Gap. The Quarterly Review of Economics and Finance, 78, 12-21. doi:10.1016/j.qref.2020.02.005
Muravyev, A., Talavera, O., & Schafer, D. (2009). Entrepreneurs’ Gender and Financial Constraints: Evidence from International Data. Journal of Comparative Economics, 37, 270-86. doi:10.1016/j.jce.2008.12.001
Naituli, G., Wegulo, F. N., & Kaimenyi, B. (2006). Entrepreneurial Characteristics among Micro and Small-scale Women Owned Enterprises in North and Central Meru Districts, Kenya, Nairobi. UNESCO.
Natile, S. (2019). Regulating Exclusions? Gender, Development and the Limits of Inclusionary Financial Platforms. International Journal of Law in Context, 15, 461-78. doi:10.1017/S1744552319000417
Neef, T., & Robilliard, A.-S. (2021). Half the Sky? The Female Labor Income Share in a Global Perspective. World Inequality Lab – Working Paper.
Nickell, S. (1981). Biases in Dynamic Models with Fixed Effects. Econometrica, 49, 1399-416. doi:10.2307/1911408
Ohiomu, S., & Ogbeide-Osaretin, E. N. (2020). Financial Inclusion and Gender Inequality Reduction: Evidence from Sub-Saharan Africa. The Indian Economic Journal, 67, 367-72. doi:10.1177/0019466220946411
Ostry, J. D., Alvarez, J., Espinoza, R., & Papageorgiou, C. (2018). Economic Gains from Gender Inclusion: New Mechanisms, New Evidence. IMF Staff Discussion Note.
Pesaran, M. H., & Smith, R. P. (1995). Estimating Long-run Relationships from Dynamic Heterogeneous Panels. Journal of Econometrics, 68, 79-113. doi:10.1016/0304-4076(94)01644-F
Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94, 621-34. doi:10.2307/2670182
Roberts, A. (2015). Gender, Financial Deepening and the Production of Embodied Finance: Towards a Critical Feminist Analysis. Global Society, 29, 107-27. doi:10.1080/13600826.2014.975189
Roodman, D. (2006). How to do xtabond2: An introduction to “Difference” and “System” GMM in Stata. Center for Global Development (CGD) Working Paper.
Roodman, D. (2009). How to Do xtabond2: An Introduction to Difference and System GMM in Stata. The Stata Journal, 9, 86-136. doi:10.1177/1536867X0900900106
Ruiz, C. (2013). From Pawn Shops to Banks: The Impact of Formal Credit on Informal Households. World Bank Policy Research Working Paper.
Sahay, R., Cihak, M., & other IMF Staff. (2018). Women in Finance: A Case for Closing Gaps. IMF Staff Discussion Note.
Salman, A., & Nowacka, K. (2020). Innovative Financial Products and Services for Women in Asia and the Pacific. Asian Development Bank Sustainable Development Working Paper Series.
Schaner, S. (2016). The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor. NBER Working Paper.
Suri, T., & Jack., W. (2016). The Long-run Poverty and Gender Impacts of Mobile Money. Science, 354, 1288-92. doi:10.1126/science.aah5309
Svirydzenka, K. (2016). Introducing a New Broad-based Index of Financial Development. IMF Working Paper.
Swamy, V. (2014). Financial Inclusion, Gender Dimension, and Economic Impact on Poor Households. World Development, 56, 1-15. doi:10.1016/j.worlddev.2013.10.019
UN Women. (2021). Gender Statistics for Evidence-Based Policies: Women’s Economic Empowerment, Health and Gender-based Violence. Report, Nairobi, Kenya: UN Women.
Alesina, A., Giuliano, P., & Nunn, N. (2013). On the Origins of Gender Roles: Women and the Plough. Quarterly Journal of Economics, 128, 469-530. doi: 10.1093/qje/qjt005
Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economic Studies, 58, 277-297. doi: 10.2307/2297968
Arellano, M., & Bover, O. (1995). Another Look at the Instrumental Variable Estimation of Error Component Models. Review of Economic Studies, 68, 29-51. doi:10.1016/0304-4076(94)01642-D
Arnold, J., & Gammage, S. (2019). Gender and Financial Inclusion: The Critical Role for Holistic Programming. Development in Practice, 29, 965-973. doi:10.1080/09614524.2019.1651251
Asiedu, E., Kalonda-Kanyama, I., Ndikumana, L., & Nti-Addae, A. (2013). Access to Credit by Firms in Sub-Saharan Africa: How Relevant is Gender? American Economic Review: Papers & Proceedings, 103, 293-297. doi:10.1257/aer.103.3.293
Asongu, S. A., & Odhiambo, N. M. (2018). ICT, Financial Access and Gender Inclusion in the Formal Economic Sector: Evidence from Africa. Working Paper, African Governance and Development Institute.
Autor, D. H. (2015). Why Are There Still So Many Jobs? The History and Future of Workplace Automation. Journal of Economic Perspectives, 29, 3-30. doi:10.1257/jep.29.3.3
Autor, D. H., & Dorn, D. (2013). The Growth of Low Skill Service Jobs and the Polarization of the U.S. Labor Market. American Economic Review, 103, 1553-97. doi:10.1257/aer.103.5.1553
Balasubramanian, S. A., Kuppusamy, T., & Natarajan, T. (2019). Financial Inclusion and Land Ownership Status of Women. International Journal of Development Issues, 18, 51-69. doi:10.1108/IJDI-06-2018-0091
Belluci, A., Borisov, A., & Zazzaro, A. (2010). Does Gender Matter in Bank–firm Relationships? Evidence from Small Business Lending. Journal of Banking & Finance, 34, 2968-84. doi:10.1016/j.jbankfin.2010.07.008
Berik, G., Rodgers, Y. M., & Seguino, S. (2011). Feminist Economics of Inequality, Development, and Growth. In G. Berik, Y. M. Rodgers, & S. Seguino (Eds.), Inequality, Development, and Growth (pp. 1-33). Routledge, London and New York. doi:10.1080/13545700903093524
Blundell, R., & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87, 115-43. doi:10.1016/S0304-4076(98)00009-8
Bond, S., Hoeffler, A., & Temple, J. (2001). GMM Estimation of Empirical Growth Models. Working Paper, Centre for Economic Policy Research (CEPR).
Buvinic, M., & Furst-Nichols, R. (2016). Promoting Women's Economic Empowerment: What Works? The World Bank Research Observer, 31, 59-101.
Chen, G., & Chen, S. (2016). Financial Development, Labor Participation, and Employment in Urban China. Emerging Markets Finance and Trade, 52, 754-64. doi:10.1080/1540496X.2016.1116285
Connelly, R. (1992). The Effect of Child Care Costs on Married Women’s Labor Force Participation. Review of Economics and Statistics, 74, 83-90. doi:10.2307/2109545
Deléchat, M. C., Newiak, M. M., Xu, R., Yang, M. F., & Aslan, G. (2018). What is Driving Women’s Financial Inclusion Across Countries? Working Paper, International Monetary Fund.
Demirguc-Kunt, A., & Klapper, L. (2013). Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries. Brookings Papers on Economic Activity, 2013, 279-340.
Demirguc-Kunt, A., & Levine, R. (2009). Finance and Inequality: Theory and Evidence. Annual Review of Financial Economics, 1, 287-318. doi:10.1146/annurev.financial.050808.114334
Demirguc-Kunt, A., Honohan, P., & Beck, T. (2008). Finance for All? Policies and Pitfalls in Expanding Access. World Bank Policy Research Report.
Demirguc-Kunt, A., Klapper, L. F., & Singer, D. (2013). Financial Inclusion and Legal Discrimination against Women: Evidence from Developing Countries. World Bank Policy Research Working Paper.
Demirguc-Kunt, A., Klapper, L. F., Singer, D., & Van Oudheusden, P. (2015). The Global Findex Database 2014: Measuring Financial Inclusion around the World. World Bank Policy Research Working Paper.
Ellis, A., Cutura, J., Dione, N., Gillson, I., Manuel, C., & Thongori, J. (2007). Gender and Economic Growth in Kenya : Unleashing the Power of Women. World Bank, Washington DC.
Fernandez, R., Fogli, A., & Olivetti, C. (2004). Mothers and Sons: Preference Formation and Female Labor Force Dynamics. Quarterly Journal of Economics, 119, 1249-99. doi:10.1162/0033553042476224
Gornick, J. C., Meyers, M. K., & Ross, K. E. (1998). Public Policies and the Employment of Mothers: A Cross-National Study. Social Science Quarterly, 79, 35-54.
Hallward-Driemeier, M. (2013). Enterprising Women : Expanding Economic Opportunities in Africa. World Bank, Washington DC.
Han, R., & Melecky, M. (2013). Financial Inclusion for Financial Stability: Access to Bank Deposits and the Growth of Deposits in the Global Financial Crisis. Policy Research Working Paper, World Bank.
Kim, K. (2022). Assessing the Impact of Mobile Money on Improving the Financial Inclusion of Nairobi Women. Journal of Gender Studies, 31, 306-22. doi:10.1080/09589236.2021.1884536
Kirmizioglu, H., & Elveren, A. Y. (2022). Financial Development and Female Labor Income Share: Evidence from Global Data. MPRA Working Paper.
Kiviet, J. (1995). On Bias, Inconsistency, and Efficiency of Various Estimators in Dynamic Panel Data Models. Journal of Econometrics, 68, 53-78. doi:10.1016/0304-4076(94)01643-E
Klapper, L. F., & Parker, S. (2011). Gender and the Business Environment for New Firm Creation. The World Bank Research Observer, 26, 237-57.
Klasen, S. (2002). Low Schooling for Girls, Slower Growth for All? Cross-Country Evidence on the Effect of Gender Inequality in Education on Economic Development. World Bank Economic Review, 16, 345-73. doi:10.1093/wber/lhf004
Levine, R. (2021). Finance, Growth, and Inequality. IMF Working Paper.
Llussa, F. (2009). Financial Development, Gender and Entrepreneurship. MIT Engineering Systems Division Working Paper Series.
Morsy, H. (2020). Access to Finance – Mind the Gender Gap. The Quarterly Review of Economics and Finance, 78, 12-21. doi:10.1016/j.qref.2020.02.005
Muravyev, A., Talavera, O., & Schafer, D. (2009). Entrepreneurs’ Gender and Financial Constraints: Evidence from International Data. Journal of Comparative Economics, 37, 270-86. doi:10.1016/j.jce.2008.12.001
Naituli, G., Wegulo, F. N., & Kaimenyi, B. (2006). Entrepreneurial Characteristics among Micro and Small-scale Women Owned Enterprises in North and Central Meru Districts, Kenya, Nairobi. UNESCO.
Natile, S. (2019). Regulating Exclusions? Gender, Development and the Limits of Inclusionary Financial Platforms. International Journal of Law in Context, 15, 461-78. doi:10.1017/S1744552319000417
Neef, T., & Robilliard, A.-S. (2021). Half the Sky? The Female Labor Income Share in a Global Perspective. World Inequality Lab – Working Paper.
Nickell, S. (1981). Biases in Dynamic Models with Fixed Effects. Econometrica, 49, 1399-416. doi:10.2307/1911408
Ohiomu, S., & Ogbeide-Osaretin, E. N. (2020). Financial Inclusion and Gender Inequality Reduction: Evidence from Sub-Saharan Africa. The Indian Economic Journal, 67, 367-72. doi:10.1177/0019466220946411
Ostry, J. D., Alvarez, J., Espinoza, R., & Papageorgiou, C. (2018). Economic Gains from Gender Inclusion: New Mechanisms, New Evidence. IMF Staff Discussion Note.
Pesaran, M. H., & Smith, R. P. (1995). Estimating Long-run Relationships from Dynamic Heterogeneous Panels. Journal of Econometrics, 68, 79-113. doi:10.1016/0304-4076(94)01644-F
Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94, 621-34. doi:10.2307/2670182
Roberts, A. (2015). Gender, Financial Deepening and the Production of Embodied Finance: Towards a Critical Feminist Analysis. Global Society, 29, 107-27. doi:10.1080/13600826.2014.975189
Roodman, D. (2006). How to do xtabond2: An introduction to “Difference” and “System” GMM in Stata. Center for Global Development (CGD) Working Paper.
Roodman, D. (2009). How to Do xtabond2: An Introduction to Difference and System GMM in Stata. The Stata Journal, 9, 86-136. doi:10.1177/1536867X0900900106
Ruiz, C. (2013). From Pawn Shops to Banks: The Impact of Formal Credit on Informal Households. World Bank Policy Research Working Paper.
Sahay, R., Cihak, M., & other IMF Staff. (2018). Women in Finance: A Case for Closing Gaps. IMF Staff Discussion Note.
Salman, A., & Nowacka, K. (2020). Innovative Financial Products and Services for Women in Asia and the Pacific. Asian Development Bank Sustainable Development Working Paper Series.
Schaner, S. (2016). The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor. NBER Working Paper.
Suri, T., & Jack., W. (2016). The Long-run Poverty and Gender Impacts of Mobile Money. Science, 354, 1288-92. doi:10.1126/science.aah5309
Svirydzenka, K. (2016). Introducing a New Broad-based Index of Financial Development. IMF Working Paper.
Swamy, V. (2014). Financial Inclusion, Gender Dimension, and Economic Impact on Poor Households. World Development, 56, 1-15. doi:10.1016/j.worlddev.2013.10.019
UN Women. (2021). Gender Statistics for Evidence-Based Policies: Women’s Economic Empowerment, Health and Gender-based Violence. Report, Nairobi, Kenya: UN Women.