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Altan Aldan

Altan Aldan is an Economist at the CBRT.

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The female labor participation rate in Turkey has increased considerably in recent years, but is still low compared to the OECD average (Chart 1). Detecting the factors affecting the female labor force participation rate is significant to the design of policies to maintain this increase in the period ahead. The change in the determinants of female labor participation over time and the contributions of these changes to the increase in the labor participation rate are analyzed in this study. 

Research on Turkey points at multiple factors that affect the decision of women to participate in the labor force. Education, especially a college diploma, is significant to the inclusion of women in business life. Heavier responsibilities imposed on married women weigh on their prospects for labor participation. In patriarchal households composed of several generations, women can share their housekeeping responsibilities, enabling them to find occupations. However, having children and accommodating elder relatives increase the domestic workload of women, reducing the probability of working outside. Lastly, the age and cohort effects are influential in the individuals’ the decisions to participate in the labor force. The age effect denotes changes in the participation rate of an individual over the course of their life, while the cohort effect is considered as the difference in the labor participation decisions of the young than the elderly.

Household Budget Survey statistics from 2004 and 2016 reveal drastic changes in factors affecting the female labor participation rate over time (Table 1). Firstly, the average education level of women exhibits a notable improvement. The share of college graduates has increased from 6% to 16.7%, and the share of women with low levels of education has declined. Other noticeable changes are the decline in the probability of bearing children, increased possibility of accommodating elder relatives, and the rise in the average age.

We estimate the factors affecting the non-agricultural labor participation rate of women by using a logit model with data of the 2004-2016 period. Results are displayed in Table 2. Increased education level pushes the female participation rate up. On the other hand, being married, having children or accommodating elder relatives put a limit on the access of women to the labor force due to increased domestic responsibilities.

Increased education level tends to remove the obstacles on the career path of women with children. Similarly, changes in corporate structures, e.g. increased day-care facilities or pre-school education, can diminish the negative effects of having children over time. Effects of these channels are presented by coefficients of the interaction terms of having children with education level and year variables (Table 3). Among women with children aged 0-5, i.e. pre-school, those with high school or college diplomas are more likely to participate in the labor force. In other words, improvement in education level limits the negative effect of having children on the access to the labor force. On the other hand, year coefficients are not statistically significant, indicating that the negative effect of having children on the access to the labor force did not decrease over time.

What are the reasons underlying the rise in the non-farm labor force participation rate of women in the 2004-2016 period? Table 4 illustrates the shares of factors stimulating the rise in the female labor force participation rate relying on the above-stated analysis results. Cohort effects account for 63.1% of the rise in the participation rate. In other words, women of the rising generation are more inclined to participate in the labor force compared to the previous generations. Changes in societal norms or institutions may drive new generations to be more active in the labor force. For example, the gradual increase in the retirement age pushes up the labor force participation rate among the young. Meanwhile, increased education level accounts for the approximately one-fourth rise in the labor force participation rate. Alongside its direct effect, an increased education level enhances the rise in the labor force participation rate by reducing the negative effect of having children. Age effects and reduced fertility are other factors that give a push to the labor participation rate. Increased possibility of accommodating an elder relative, on the other hand, pulls it down to a limited extent.

In sum, the female labor force participation rate has registered notable improvements in recent years. Still, maintaining the gains of recent years is significant to convergence to advanced economies. Factors such as improved education, maintenance of the gradual rise in the retirement age, and cohort effects will push up the female labor participation rate further. On the other hand, facilitating day-care and pre-school education services and offering them at affordable prices are critical to accelerate this increase. Finally, the rate of elderly population will trend upwards in the years to come. It is important to build an increased number of care centers for the elderly citizens so that this change will not have a negative effect on the female labor participation rate.

References

Aldan, A. ve Öztürk, S. (2019). Determinants of the Rise in Female Labor Force Participation Rate: Identifying Cohort Effects. CBRT Working Paper No: 19/05.

 

Altan Aldan

Altan Aldan is an Economist at the CBRT.

Note To Editor
For views, suggestions
and comments:
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* The views expressed here are those of the authors. They do not necessarily reflect the official views of the Central Bank of the Republic of Turkey.