The asymmetric cyclical behaviour of female labour force participation in Latin America

Maridueña-Larrea, Ángel and Martín-Román, Ángel L. (2023): The asymmetric cyclical behaviour of female labour force participation in Latin America.

Abstract

This study measures the responsiveness of female labour participation to changes in the economic cycle at the extensive margin in Latin America. The results provide new evidence regarding the cyclical behaviour of the female labour force participation, making it possible to determine which countries validate the traditional hypotheses of the added and discouraged worker. Another significant finding is that these effects vary during cycles of economic expansion and recession and become stronger when reaching a certain threshold. Therefore, contradictory hypotheses to the added and discouraged worker emerged, which is referred to as subtracted and encouraged workers, both of which are formally validated by examining these effects throughout the economic cycles.

• Item Type: MPRA Paper
• Language: English
• Keywords: Added worker effect, discouraged worker effect, unemployment rate, labour force participation rate, economic cycle
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J68 - Public Policy

References

Addabbo, T., Rodríguez-Modroño, P. and Muñoz, L. G. (2015) ‘Gender Differences in Labour Force Participation Rates in Spain and Italy under the Great Recession’, Revista de Economia Mundial, 2015, 21–42.

Başlevent, C. and Onaran, Ö. (2003) ‘Are Married Women in Turkey more likely to become Added or Discouraged Workers?’, Review of Labour Economics and Industrial Relations, 17, 439–458.

Bredtmann, J., Otten, S. and Rulff, C. (2018) ‘Husband’s Unemployment and Wife’s Labour Supply: The Added Worker Effect across Europe’, Industrial and Labour Relations Review, 71, 1201–1231.

CEDLAS and World Bank (2022) ‘Labor Database for Latin America and the Caribbean’, Center for Distributive, Labor and Social Studies of the National University of La Plata in Argentina.

CEPAL (2019) ‘Balance Preliminar de las Economías de América Latina y el Caribe 2019’, Naciones Unidas, Santiago, Comisión Económica para América Latina y el Caribe.

Cerrutti, M. (2000) ‘Economic Reform, Structural Adjustment and Female Labour Force Participation in Buenos Aires, Argentina’, World Development, 28, 879–891.

Congregado, E., Carmona, M., Golpe, A. A. and Van Stel, A. (2014) ‘Unemployment, Gender and Labour Force Participation in Spain: Future Trends in Labour Market’, Romanian Journal of Economic Forecasting, 17, 53–66.

Congregado, E., Gałecka-Burdziak, E., Golpe, A. A. and Pater, R. (2021) ‘Unemployment Invariance Hypothesis and Structural Breaks in Poland’, The Journal of Economic Asymmetries, 24, e00198.

Congregado, E., Gałecka-Burdziak, E., Golpe, A. and Pater, R. (2020) ‘Asymmetry and Non-Linearity in Discouraged and Added Worker Effects’, Eastern European Economics, 58, 221–241.

Darby, J., Hart, R. A. and Vecchi, M. (2001) ‘Labour Force Participation and the Business Cycle: A Comparative Analysis of France, Japan, Sweden and the United States’, Japan and the World Economy, 13, 113–133.

Evans, A. (2018) ‘Evidence of the Added-Worker and Discouraged-Worker Effects in Australia’, International Review of Applied Economics, 32, 472–488.

Fernandes, R. and De Felício, F. (2005) ‘The Entry of the Wife into the Labour Force in Response to the Husband’s Unemployment: A Study of the Added Worker Effect in Brazilian Metropolitan Areas’, Economic Development and Cultural Change, 53, 887–911.

Fuchs, J. and Weber, E. (2017) ‘Long-Term Unemployment and Labour Force Participation: A Decomposition of Unemployment to Test for the Discouragement and Added Worker Hypotheses’, Applied Economics, 49, 5971–5982.

Gałecka-Burdziak, E. and Pater, R. (2016) ‘Discouraged or Added Worker Effect: Which One Prevails in the Polish Labour Market?’, Acta Oeconomica, 66, 489–505.

Groisman, F. (2011) ‘Argentina: Los Hogares y los cambios en el Mercado Laboral (2004-2009)’, CEPAL Review, 2011, 81–102.

Hansen, B. E. (1999) ‘Threshold Effects in Non-Dynamic Panels: Estimation, Testing, and Inference’, Journal of Econometrics, 93, 345–368.

Hernández, R. D. and Romano, P. O. (2011) ‘Análisis por Cohortes de la Participación Laboural en México (1987-2009)’, Trimestre Económico, 78, 343–375.

Lee, K. W. and Cho, K. (2005) ‘Female Labour Force Participation during Economic Crises in Argentina and the Republic of Korea’, International Labour Review, 144, 423–450.

Long, C. D. (1953) ‘Impact of Effective Demand on the Labour Supply’, The American Economic Review, 43, 458–467.

Long, C. D. (1958) ‘The Labour Force under Changing Income and Employment’, Princeton University Press, 86, 1725304.

Martín-Román, Á. L. (2022) ‘Beyond the Added-Worker and the Discouraged-Worker Effects: The Entitled-Worker Effect’, Economic Modelling, 110, 105812.

Martín-Román, Á. L. and Moral de Blas, A. (2002) ‘Oferta de Trabajo y Desempleo en Europa: el caso de las mujeres’, Revista de Estudios Europeos, 30, 23–41.

Ontaneda Jiménez, D. D., Guzmán Espinoza, W. A., Mendieta Muñoz, L. R. and Răileanu Szeles, M. (2022) ‘Cohort Analysis of Labour Participation and Sectoral Composition of Employment in Ecuador’, Romanian Journal of Economic Forecasting, 25, 67–87.

Parker, S. W. and Skoufias, E. (2004) ‘The Added Worker Effect over the Business Cycle: Evidence from Urban Mexico’, Applied Economics Letters, 11, 625–630.

Paz, J. A. (2009) ‘El Efecto del Trabajador Adicional. Evidencia para Argentina (2003-2007)’, Cuadernos de Economía, 46, 225–241.

Serrano, J., Gasparini, L., Marchionni, M. and Glüzmann, P. (2019) ‘Economic Cycle and Deceleration of Female Labour Force Participation in Latin America’, Journal for Labour Market Research, 53, 1–21.

Tong, H. (1983) ‘Threshold Models in Non-Linear Time Series Analysis’, New York, Springer Science & Business Media.

Tong, H. and Lim, K. S. (1980) ‘Threshold Autoregression, Limit Cycles and Cyclical Data’, Journal of the Royal Statistical Society: Series B (Methodological), 42, 245–268.

Woytinsky, W. S. (1940) ‘Additional Workers on the Labour Market in Depressions: A Reply to Mr. Humphrey’, Journal of Political Economy, 48, 735–739.