Aggregate Demand Matters for Female Labour Force Participation
Description
Replication material for the paper "Aggregate Demand Matters for Female Labour Force Participation". This replication package contains the data and Stata code required to reproduce all tables and figures presented in the paper. The paper examines female labour force participation through a macroeconomic lens, focusing on the role of aggregate demand. In line with the literature on hysteresis, we argue that growth in the level of demand expands employment opportunities and encourage women’s entry into the labour force, while demand contractions discourage participation. Using panel data for 21 OECD countries over the period 1960 to 2016, we show that sustained increases in autonomous demand are followed by durable rises in female labour force participation, whereas contractions generate similarly persistent declines. Long-run marginal effects, normalised by the treatment dosage, equal 0.133 for expansion episodes and 0.139 (in absolute value) for contraction episodes, corresponding to long-run elasticity-type measures of 0.22 and 0.23, respectively. The effects exhibit substantial heterogeneity across Varieties of Capitalism, with the long-run elasticity-type measure reaching 1.01 during expansion episodes in Mixed Market Economies. These results indicate that women’s participation is not determined solely by individual characteristics or social norms but is closely shaped by macroeconomic conditions. Strengthening demand may therefore be a powerful, and often overlooked, instrument for promoting female participation. The question is relevant today not only in view of fostering gender equality, but also of the demographic decline in mature economies: an increase in female labour force participation could provide significant additions to the labour supply, particularly in countries where it still is relatively low.