**Plc,Planning, and 11,eparch**

# **Women in Development**

This paper describes how the composition of the labor force changes with economic development. It considers recent trends in women's labor force participation and the type of jobs held in various sectors as national per capita income increases.

What policies affect the relative competitiveness of families and firms - and the extent to which women work for one or the other? Women are more likely to work in the family or informal labor market if the labor costs to firms exceed the opportunity costs of female labor to family enterprises. Firms are at a relative disadvantage compared with families in the employment of less experienced and less skilled labor, presumably because their labor costs are affected by such regulations as minimum wage legislation, social insurance premiu is, limits on firing, costs of monitoring producti ty, and rules about severance pay. The mini.tium-wage two-sector model predicts that raising effective minimum wage levels would increase the share of families (or the uncovered sector) in the labor force.

Therc are statistically significant relationships between income per adult in a country and the share of wage earrers in most sectors of the economy - particularly in manufacturing, commerce, services, transportation, and utilities. As real income per adult increases, the overall fraction of wage eamers increases, exccpt in the case of women's entry into wage employment in agriculture.

In Asia and Africa, an increase in the proportion of employment in finns within the major sectors accounts for most of the rapid growth in women's overall share of wage employment. In Latin America, however, growth in the proportion of firm employment has been slower than elsewhere, and share of women in wage employment has even fallen overall in several countries. r[is is consistent with the greater labor market distortions in these countries of Latin America during the 1960s and 1970s - which hindered more firm employmcnt of lower paid workers. Latin American women were progressively less likely to enter the labor force in manm.acturing, a sector that absorbs many women as wage workers in other regions.

Enforcement and coverage of minimunm wage legislation are difficult to measure, but it appears that women (and to a lesser extent mcn) participate less in the overall labor force when minimum wages are higher as a proportion of GNP per adult.

It is not unreasonable to assume that women have lost more than men from market regulations and distortions, but little research has addressed this proposition. If it is true, however, these interventions in the labor market may bc responsible for slowing women's transition from nonmarket and family work to firm cmploymcnt. This in tum may affect the rate and structure ol economic growth.

This paper is a product of the Women in Development Division, Population and Human Resources Department. Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. Please contact Maria Abundo, room S9-125, extension 36820 (47 pages with tables).

The PPR Working Paper Series disseminates the findings of work under way in the Bank's Policy, Planning, and Research Complex. An objectivc of the series is to get these findings out quickly, even if presentations are less than fully polished. The findings, intcrpretations, and conclusions in these papers do not necessarily represent official policy of the Bank.

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