Female labour force participation : how important are cultural factors?

Abstract

Low female labour force participation rate has been a longstanding issue of concern. Whereas a low female labour force participation rate implies underutilization of resources, increasing the entry of women in the labour force is the solution to many economic woes. Such a course of action will surely lead to a decline in pressure faced by the dependency ratio, a higher degree of productivity and an increase in economic growth. Women's participation in the labour market is therefore encouraged. Given that Malta's low female participation is largely due to cultural factors, this study provides a better understanding of those factors affecting female labour supply and their respective effects. This study builds upon existing work by translating cultural variables into meaningful indicators. In pursuance of this objective a time series econometric model, for the period 1960-2010, is used. The first model is based solely on economic variables, whilst the second model is an extension of the economic model to include the cultural variables. The findings suggest that economic variables only explain part of the contribution to the change. Although these economic variables are important, cultural variables also affect female labour force participation. Results indicate that some of the variables, such as wages, education, availability of maternity leave and the provision of childcare centres exert a positive effect on female labour supply. On the other hand, high unemployment and religious belief exert a negative effect on female labour force participation. In fact, religious belief exerts the biggest effect on female labour force participation rate. Conversely, the availability of affordable childcare centres and the provision of maternity leave are important cultural variables for increasing female labour force participation rates. Thus, cultural variables are important in explaining female labour supply. Following these results, a set of policy recommendations are outlined. Policy implications are namely related to family-friendly measures, challenging traditional stereotype thinking, legislation and fiscal policies.