Female employment rates in advanced and transition economies followed diverging trends in the last year. Why? Well, it is not just about transition. Instead, our results suggest that the positive trends behind the improvement in advanced economies are less efficient when gaps are low enough. These results call for a rethink of female employment rates.

1. How (not) to make women work
Evidence from transition economies
Joanna Tyrowicz Karolina Goraus Lucas van der Velde
University of Warsaw University of Warsaw University of Warsaw
GRAPE|FAME World Bank GRAPE|FAME
Our contribution
*We explain diverging patterns of female
employment in transition and advanced
economies
* Collect 1500+ micro-databases from transition
and advanced economies
* Provide reliable and comparable estimates of
gender employment gaps
* Analyze the determinants of changes in employ-
ment rates in transition vs advanced economies
Employment rates in transition and advanced economies
50
55
60
65
70
Femaleemp.rate 1990 1995 2000 2005 2010 2015
Year
Transition economies Advanced economies
Female employment rates
−.05
0
.05
.1
.15
.2
Coeff.and95%CI
1990 1995 2000 2005 2010 2015
Year
Transition economies Advanced economies
Ratio of female to male employment rate
Notes: Average female employment ratios in transition (new EU members) and advanced economies (left). Coecients on
year dummies of a regression of the ratio of female to male employment ratios.
The initial fall of female employment rates
Common explanations:
H1 Articially high employment ratio before transition
Then: Employment ratio ↓ active cohorts
H2 Inecient matching in entry transitions
Then: Employment ratio ↓ new cohorts
Procedure:
Regress female employment ratio on age, country and
source FE. Fitted values on the right.
0
.2
.4
.6
.8
Linearpredictionwith90%CI
22 27 32 37 42 47 52 57 62
Age
1991−1994 2004−2007
Transition economies
0
.2
.4
.6
.8
Linearpredictionwith90%CI
22 27 32 37 42 47 52 57 62
Age
1991−1994 2004−2007
Advanced economies
Results:
1. Female employment ratio increased for all cohorts in advanced economies. Mixed results for transition countries
2. Female employment ratio larger for cohorts employed before transition and lower for young cohorts → educational boom? Mismatch?
Why ratio improved over time in advanced economies and not in transition economies
Role of institutions
• Cost-benet analysis of working
expansion of childcare facilities ⇒ ↓ cost
better education ⇒ ↑ E(wage)
Procedure
1 Calculate raw and adjusted employment gaps
via Ñopo(2008)
2 Regress the adjusted component on dierent
cost measures ( + country, source and year FE).
3 Test for diverging trends via Wald test.
• 2 comparisons: advanced vs transition
young vs old cohort in transition countries
(1) Advanced vs. transition economies
Dependent variable: Potential benets Costs
adjusted emp. gap ln GDP pc % fem in HE Fem. ER % hh. w/ kid
coecient -0.26*** -0.88*** -1.53*** 0.18*
x transition 0.41*** 0.98*** 0.77*** -0.12
Wald test (p-value) 0 0.31 0 0.55
N 1,411 1,544 1,544 931
(2) Transition economies: cohort heterogeneity
Dependent variable: Potential benets Costs
adjusted emp. gap ln GDP pc % fem in HE Fem. ER % hh. w/ kid
Worked before trans. -0.05*** -0.03** 0.01 0.10***
Coecient 0.16*** -0.04 -0.62*** 0.77***
N 1,570 1,761 1,761 1,390
Notes: Dependent variable is the adjusted employment gap. Observations weighted by the inverse number of
databases collected for each country and year. Independent variables (coecient) displayed in column headers.
Work before transition = 1 if respondent was over 25 years old at onset of transition (EBRD)
Results:
1. Cost-benet improvements had dierent eects in transition and advanced economies → Dierences related with level of the adj. emp. gap
2. Gender employment gaps were larger among younger cohorts → habit formation among older cohorts of women.
Conclusions: on the limits to policy intervention
→ Policies to close the employment gap become less eective in a context of low employment gaps,
e.g transition economies.
→ Work-orders in transition → habit formation among older women → lower employment gaps.
→ Young cohorts faced greater employment gaps → role of educational boom vs skill mismatch vs care
inst.
Acknowledgements
Earlier versions of this paper received valuable com-
ments from G. Giannelli, S. Estrin and participants of
WIEM 2016, WCCE 2017. This research was supported
by a grant from the National Science Centre, UMO-
2012/05/E/HS4/01510. The remaining errors are ours.