From Crisis to Growth

The Economic Impact of Women in the Workforce

Scholars are interested in the impact that levels of female and male participation in the workforce have on countries’(1) economic success. Many studies have been conducted on the inequality between females and males in terms of their wages1 and participation in the workforce globally. Several studies have pointed to the impact that investment in women’s(2) education has on profitability.

Following these studies, we wanted to extend our knowledge about the connection between female and male participation in the workforce with macroeconomic indicators. In our analysis, we explored the link between female and male participation in the workforce and country-level gross domestic product (GDP) indicators: GDP per capita and GDP growth over the last two decades (2000-2017). In addition, our analysis explored the relationship between female and male participation in the workforce and female or male attainment of secondary education with GDP indicators (per capita and growth).

Furthermore, we explored the impact of female participation in the workforce on GDP growth in percentage terms, before, during, and after the world economic crisis of 2008-2009.(3)

This analysis will try to answer the following questions:

  1. To what extent does women’s participation in the workforce correlate with the increase of GDP?
  2. To what extent does the interaction between female and male participation in the workforce affect GDP?
  3. Regarding the attainment of secondary education, to what extent does equality or inequality between women and men correlate with economic indicators?
  4. To what extent does the interaction between female participation in the workforce and the similarities/differences between female and male education correlate with an increase in GDP?

We categorized the world’s countries into 7 geopolitical regions: North America, Europe & Central Asia, East Asia & Pacific, Latin America & Caribbean, Middle East & North Africa, South Asia, and Sub-Saharan Africa and we explored these issues for each region over time — 2000-2017.

View our interactive dashboard

for full visualization of the research data

Methodology

In order to answer these questions, we gathered data from World Bank open data. The data included the following variables over 17 years. We also created indices based on this data.

  1. Annual GDP Growth (%) 2000-2017
  2. GDP per Capita (in US$) 2000-2017
  3. Unemployment, Females (% of females in the workforce) (World Bank Modeled ILO Estimate) 2000-2017
  4. Unemployment, Males (% of males in the workforce) (Word Bank Modeled ILO Estimate) 2000-2017
  5. Percentage of Female Pupils in Secondary Education, 2000-2016
    • Based on these variables, we computed female-male employment and female-male education equality index
  6. Female Employment (%)
    • 100%, minus the female Unemployment rate. This indicates the percentage of females in the workforce of a given country.
  7. Male Employment (%)
    • 100%, minus the male Unemployment rate. This indicates the percentage of males in the workforce of a given country.
  8. Female-Male Employment Participation Index
    • Female employment (%) * Male employment (%).
    • On a scale of 0-1000, when 1000 indicates the complete participation of females and males in the workforce.
  9. Female-Male Education Equality Index
    • (0-0.50, when 0.50 = Gender Equality) = 1 – ((% female employment) + (% male employment) )
    • This index estimates the equality or inequality in education attainment between male and female pupils.
    • When the index = 0.50 there is equal attainment between males and females.
  10. The level of Educated Females in the Workforce:
    • Female-Male Education Equality Index x Female employment
  11. The level of Educated Males in the Workforce:
    • Female-Male Education Equality index x Male employment

Furthermore, in order to test the impact of female and male participation in the workforce before, during, and after the economic crisis, we computed the additional following variables:

  1. Average GDP growth (annual %) 2000-2008 (before the crisis)
  2. Average GDP growth (annual %) 2009 (during the economic crisis)
  3. Average GDP growth (annual %) 2010-2017 (after the crisis)
  4. Average GDP per Capita (annual $) 2000-2008 (before the crisis)
  5. Average GDP per Capita (annual $) 2009 (during the economic crisis)
  6. Average GDP per Capita (annual $) 2010-2017 (after the crisis)
  7. Average 2000-2008 Male employment (before the crisis)
  8. Average 2009-2017 Male employment (after the crisis)
  9. Average 2000-2008 Female employment (before the crisis)
  10. Average 2009-2017 Female employment (after the crisis)

We also ranked participation in the workforce (female or male)

A = 95% Participation,

B = 90-94% Participation,

C = Less than 90% Participation

Our analysis included an additional focus on the differences between developed countries.

Main Findings

During 2008-2009, the global economy went through a crisis. The average growth of global GDP decreased from 4.31% in 2007 to 1.82% in 2008 and global GDP experienced negative growth of -1.73% in 2009. During the last decade or so, the world economy has overcome this crisis and the world GDP has returned to a growth rate of 4.31% in 2010, 3.18% in 2011, and 2.51% in 2012.

Workforce Image

On average, during 2000-2017, the annual GDP growth rate was 2.9%. The highest growth rates were documented in South Asia (6.6%). High GDP growth also occurred in Sub-Saharan Africa (4.8%) and East Asia & Pacific (4.5%). The lowest annual GDP growth rate was documented in Europe & Central Asia (1.9%) and in North America (2%). The Middle East & North Africa experienced a mid-GDP growth rate of 3.9%, as did Latin America and the Caribbean (2.7%) Specifically, there were three geopolitical regions with negative GDP growth during the world economic crisis of 2008-2009:

  • Europe & Central Asia ( - 4.47% GDP in 2009)
  • North America ( - 2.79% GDP in 2009)
  • Latin America (- 1.86% GDP in 2009)

Graph 1: GDP Growth Rate (%) by Region, 2000-2017

GDP Growth Rate

Female and Male Participation in the Workforce Before, During, and After the Economic Crisis & the Growth of GDP

Focusing on 3 regions with negative growth during the 2008-2009 economic crisis (Europe, North America and Latin America) reveals that the higher the rate of female and male participation in the workforce before the economic crisis (2000-2008) (Rank A, on the A to C scale) the higher the GDP growth rate when it bounced back after the economic crisis (2010-2017).

Table A: Female and Male Participation in the Workforce, GDP growth (%) Before (2000-2008), During (2009), and After (2010-2017) the Economic Crisis

Female and Male Participation in the Workforce, GDP growth

Graph 2: Average GDP Growth Rate

Before (2000-2008), During (2009), and After (2010-2017) the Economic Crisis, by Region

Average GDP Growth Rate Before, During, and After the Economic Crisis

Table B: Female and Male Participation in the Workforce, GDP Growth Rate (%)

Before (2000-2008), During (2009), and After (2010-2017) the Economic Crisis, by Region:

Female and Male Participation in the Workforce,
Geopolitical findings

Our findings revealed that countries with a higher rate of female and male participation in the workforce before the economic crisis were more immune to the global economic crisis of 2008-2009 and succeeded to grow rapidly after the economic crisis.

The higher female and male participation in the workforce before the economic crisis (2000-2008), the higher the GDP growth after the economic crisis (2010-2017). Additionally, female workforce participation, more than male workforce participation (before the economic crisis) is correlated with higher GDP growth after the economic crisis (Table B, Graph 4).

These findings point to the importance of female participation in the workforce in order to overcome future economic crises.

Apparently, countries that encourage female participation in the workforce will be more immune to future economic crises.

Table C: Regression Equations of Female and Male Participation in the Workforce and GDP Growth (%) During the Global Economic Crisis (2009) and After the Crisis (2010-2017)

Regression Equations of Female and Male Participation in the Workforce and GDP Growth

In the light of the high correlation between the participation of males and females in the workforce, we formulated two equations. The first calculated female participation and the second calculated male participation. With this method, we could infer which factor, male or female participation, most closely correlated to 2009 growth and 2010-2017 growth.

Findings

In general, female participation in the worldwide workforce reached 93.8% between 2000-2017.

In 2000, female participation in the workforce was 93.4% , and this participation rate bounced back in 2017 (93.8%). The regions with the highest participation of females in the workforce were East Asia & Pacific (96%), South Asia (95%), and North America (94%). Lower rates of female participation in the workforce were found in the Middle East & North Africa (81%). 90-91% female workforce participation was found in Europe and Central Asia (91%), Sub-Saharan Africa (91%), and Latin America (91%).

Graph 3: Female and Male Participation in the Workforce & GDP Growth (2010-2017)

Workforce and GDP growth Male and Female

Graph 4: Female Employment (%) 2000-2017

 Female Employment (%)

In general, male participation in the worldwide workforce reached 94.6% between 2000-2017. In 2000, male participation in the workforce was 94.1% and this participation rate rebounded by 2017 to 94.9%. The regions with the highest participation of males in the workforce were East Asia & Pacific (96%) and South Asia (95%). Following these were Sub-Saharan Africa (94%), North America (94%), Europe and Central Asia (92%), and Middle East & North Africa (92%).

Graph 5: Male Employment (%) 2000-2017

Male Employment (%)

We found a high correlation (r= 0.838) between female participation and male participation in the workforce. The higher the male participation in the workforce, the higher the female participation in the workforce, except for the Middle East & North Africa that has a larger gap between female and male participation in the workforce (91% vs 81%).

Graph 6: Employment Gender Gap by Region (Annual Average 2000-2017)

Employment Gender Gap by Region

Table D: Gender Employment Gap by Region

Gender Employment Gap

Graph 7: Secondary Education, % Female Pupils

Secondary Education, % Female Pupils

The attainment of secondary education between males and females was almost equal on a global level (48% of females are secondary education pupils). However, there was more inequality in secondary education attainment in South Asia and Sub-Saharan Africa (55% male vs. 45% female).

Graph 8: Female-Male Education Equality Index (0-0.50, when 0.50= Gender Equality)

Female-Male Education Equality Index

Graph 9: GDP per Capita ($) by Region, 2000-2017

 GDP per Capita

In general, the highest GDP per capita was found in North America ($48K per capita) and Europe & Central Asia ($23K). Following them are Latin America ($8.5K ), East Asia ($7K), and Middle East & North Africa ($6.8K). The lowest GDP per capita was found in South Asia ($1.1K) and Sub-Saharan Africa ($1.4K).

Table E: GDP Growth Rate (%) and Average GDP per Capita by Region 2000-2017

GDP Growth Rate (%) and Average GDP per Capita

During 2008-2009, the world economy went through a crisis. Nevertheless, the average annual global gross domestic product (GDP) per capita, went up from an average of $8,559 to $9,239 in 2009 and rose to an average of $10,061 in the years 2010-2017. The Global growth rate of the GDP went down from an average of 3.33% per year during 2000-2008 to negative growth of -1.73% in 2009 and back to average positive growth of 3.00% in 2010-2017.

However, a regional zoom shows that while in East Asia & Pacific the average annual per capita GDP grew from $5,872 to $7,218 to $8,775—a growth of $2,922 on average, in South Asia the change was from an annual GDP of $849 per capita to $1,165 to $1,493—an average growth of only $645 per year per capita. In Sub-Saharan Africa, the numbers are grim as well, with an average GDP per capita of $1,264 in 2000-2008, and growth of only $362 per capita to $1,626 on average in the years 2010-2017.

Furthermore, it is apparent that the gap between the regions of the world has grown. While people living in North America produced an average GDP per capita of $46,712 in the years 2000-2008, the people living in South Asia produced an average GDP per capita of only $849 per capita. In the years 2010-2017 the gap has decreased and is now between $50,508 Annual GDP in North America vs. $1,493 in South Asia. The highest GDP and strongest economies are in North America and Europe & Central Asia. In the middle are Latin America & Caribbean, the Middle East & North Africa, and East Asia & Pacific. At the lower end are Sub-Saharan Africa and South Asia. The secret to faster growth in global GDP is further development of the lower performing regions.

Table F: The Correlation Between Female and Male Employment, Attainment of Education (Secondary), GDP per Capita ($), and Growth Rate (%)

Correlation Between Female and Male Employment,

Male and Female Participation in the Workforce and GDP Before the Global Economic Crisis (2000-2008)

Participation in the Workforce and GDP Before the Global Economic Crisis

As expected, before the world economic crisis 2008-2009, male and female participation in the workforce as well as male and female education attainment correlated with the economic achievements of each country. In general, the higher male participation in the workforce, the higher the GDP per capita in each country (2000-2008. Table A).

Also, the higher the equality of female-male education attainment, as well as the more female participation in the workforce, the higher GDP per capita (2001-2003, 2005-2008). However, during this period—before the world economic crisis—these indicators were not correlated to GDP growth at the country level.

Furthermore, higher female participation as well as higher male participation in the workforce (female-male interaction), the higher GDP per capita (2001-2008).

Regarding secondary education, the higher the equality between males and females in their education attainment (equality index), the higher the GDP per capita (2000-2008). Also, the higher the female participation in the workforce, the higher the GDP per capita (2000-2008. Table A).

Male and Female Participation in the Workforce and GDP After the Global Economic Crisis (2009-2017)

When we analyzed what happened after the world economic crisis of 2008-2009, we found a different picture.

We didn't find that male participation in the workforce correlated to the GDP per capita from 2009-2017. However, female participation in the workforce correlated with GDP per capita. In 5 out of the last 8 years (2009-2011, 2015-2016), the higher the female participation in the workforce, the higher the GDP per capita. In addition, with regards to secondary education in the years after the economic crisis, we found that during the years 2009 and 2011-2012, the more equal the educational attainment is between males and females, the higher the GDP per capita in a given country.

Furthermore, female participation in the workforce was not only related to GDP per capita but also to GDP growth (%) on a country level. In 5 out of the last 8 years (2009-2011, 2015-2016), the higher the female participation in the workforce, the higher the GDP growth is in these years.

In this period, male participation in the workforce and female participation in the workforce also correlated with GDP growth and helped countries overcome the economic crisis during 2008-2009.

Plus, we found that in the years 2009, and 2011-2012, the higher the equality of male and female educational attainment and the higher the female participation in the workforce (2011-2013), the higher the GDP growth. We also found this trend for males between 2011 and 2014.

Participation in the Workforce and GDP After the Global Economic Crisis

Table G: Female and Male Participation in the Workforce & GDP Growth (%)

Before (2000-2008), During (2009), and After (2010-2017) the Economic Crisis

Geopolitical Region: East Asia & Pacific

East Asia & Pacific

Geopolitical Region: Europe & Central Asia

Europe & Central Asia

Geopolitical Region: Latin America & Caribbean

Latin America & Caribbean

Geopolitical Region: Middle East & North Africa

Middle East & North Africa

Geopolitical Region: North America

North America

Geopolitical Region: South Asia

South Asia

Geopolitical Region: Sub-Saharan Africa

Sub-Saharan Africa

Summary

During 2008-2009, when the world economy went through an economic crisis, global GDP decreased from 4.31% on average in 2007 to 1.82% in 2008 and went into negative growth (-1.73%) in 2009.

In the following decade, the world economy overcame this crisis and GDP growth bounced back to 4.31% in 2010, 3.18% in 2011, and 2.51% in 2012.

Three regions experienced negative growth during the economic crisis 2008-2009: Europe & Central Asia (-4.47% GDP at 2009), North America (-2.79% GDP in 2009) and Latin America (-1.86% GDP at 2009).

Our findings revealed that countries with a higher rate of female and male participation in the workforce before the economic crisis were more immune to the world economic crisis of 2008-2009 and bounced back to growth rapidly after the economic crisis.

The higher the female and male participation rates in the workforce before the economic crisis of 2000-2008, the higher the GDP growth after the economic crisis (2010-2017). Furthermore, female participation in the workforce before the economic crisis is more significantly correlated with higher GDP growth after the economic crisis than male participation. (Table C, page 10)

These findings point to the importance of female participation in the workforce in order to overcome future economic crises. Apparently, countries that encourage women and make it possible for them to participate in the workforce will be more immune to future economic crises.

View our interactive dashboard

for a full visualization of the research data

References:

  1. Tzannatos, Zafiris. "Women and labor market changes in the global economy: Growth helps, inequalities hurt and public policy matters."
    • World Development 27.3 (1999): 551-569.
  2. Kotz, David M. "The financial and economic crisis of 2008: A systemic crisis of neoliberal capitalism." Review of Radical Political Economics 41.3 (2009): 305-317.
  3. Tzannatos, Zafiris. "Women and labor market changes in the global economy: Growth helps, inequalities hurt and public policy matters."
    • World Development 27.3 (1999): 551-569.
  4. https://data.worldbank.org
    • [1] Average in the country level
    • [2] In light of the high correlation between the participation of males and females in the workforce, we formulated two equations. The first calculated female participation and the second calculated male participation. With this method, we could infer which factor, male or female participation, most closely correlated to 2009 growth and 2010-2017 growth.