## **Poldid Rwaxegh|**

## **Human Resources|**

# WPS 856

This paper - a product of the Human Resources Division, Latin America Technical Department - is a summary of a larger LAC study, with subsiantial contributions from the Women in Development Divisiorn of the Population and Human Resources Depanment, funded largely by the Norwegian Trust Fund. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contaci Liliana Longo, room 14-187, extension 39244 (38 pages). February 1992.

Using historical census data and the latest housenold surveys, Psacharopoulos and Tzannatos investigate changes in female employment in Latin America, the factors that determine women's participation in the labor force, and the reasons for the gap between men's and women's earnings.

Psacharopoulos and Tzannatos find, to their surprise, that despite worsened economic conditions since the 1970s, women's participation in the labor force has increased significantly since the 1950s. One explanation may be that women - especially educated urban women, most of whom probably come from the middle and upper classes - benefited disproportionately from expansion of the public sector. The factors that have most affected women's decisions to join the work force have been (after controlling for age) education and family conditions (whether the woman is married, is a head of household, or has children). Creating opportunities for women's education and employment when such factors are absent because of market failures (of which discrimination may be only one cause) will improve efficiency and reduce poverty.

Other policy-based factors that can affect women's participation in the work force include the availability of family planning services and child-care facilities. Women's participation in the labor force can also be affected by improving family law and tax regulations that create hardships for women, especially in the Caribbean, where intemal and overseas migration are common (women as urban domestic servants and men as industrial workers abroad), where visiting partnerships are common, and where women are often thrown into a vicious cycle of poverty and an inability to work.

I'sacha-^poulos and Tzannatos found that the same margina! investment (one additional year of education) yields higher returns for women than for men; and that the most cost-effective approach is to emphasize increased primary education for poorly educated women rather than more public tertiary education for more advantaged women.

In all of the countries studied, women are rewarded less than men and gender differences in human capital endowments account for an average of about a third of the observed differ- ence in earnings prima facie evidence of discrimination. On the other hand, women appear to be rewarded more proportionate to their human capital endowments than men are. This may be because they benefit disproportionately from expansion of the public sector.

The Policy Research Working PaperSeriesdissminates thePfindingsofwork underway in theBank. Anobjectiveoftheseries is to get these **faidings** out quickly, even if presentations are less than fully polished. The findings, intetpretations, and conclusions in these papers do not necessarily represent official Bank policy.

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