metadata: authors: 0: author: El Mekkaoui,Najat
1: author: Loukili,Sara
2: author: Fourouheshfar,Yeganeh
3: author: Eissa,Nada Omer
count: Morocco,Egypt, Arab Republic of,Jordan
docna: 0: docna: For Labor or for Divorce ? Unilateral
            Divorce Laws and Women’s Labor Outcomes
docty: Policy Research Working Paper
abstracts: cdata!: Despite substantial progress in closing
            the gender gap, women&#x2019;s labor force participation
            in the Middle East and North Africa remains one of the
            lowest globally, at a mere 18 percent. This paper
            investigates the effect of the introduction of unilateral
            divorce laws on women&#x2019;s labor outcomes, using
            data from the Demographic and Health Survey program that
            spans decades and a quasi-experimental
            difference-in-differences design in three countries:
            Morocco, the Arab Republic of Egypt, and Jordan. The results
            highlight that no-fault divorce legislation was associated
            with a modest increase in mothers&#x2019; labor
            outcomes, measured by current employment, a few years after
            the reform. These findings are likely induced by a power
            shift and anticipatory effects that drive women into the
            labor force. However, when a longer time window is
            considered, 10 or more years after the reform, the study
            documents a negative effect of the reform on
            women&#x2019;s labor outcomes in Morocco, and a positive
            effect in the Arab Republic of Egypt and Jordan. These
            differences can be attributed to a set of countervailing
            effects, including social norms, labor market dynamics, and
            evolution of the legislation, that make the derived utility
            from marriage, in some cases, more attractive than that
            derived from employment, and vice versa. These findings
            partially confirm results from previous research on the
            relationship between no-fault divorce and women&#x2019;s
            agency and empowerment in the Middle East and North Africa
            region, but, at the same time, contrast with prominent
            perspectives on legislation that aims at reducing
            gender-based discrimination. Instead, they show that there
            might be undesired effects of legislation and provide a
            policy relevant discussion on that basis.
display_title: For Labor or for Divorce ?
            Unilateral Divorce Laws and Women’s Labor Outcomes
listing_relative_url: /research/2024/01/34234826/labor-or-divorce-unilateral-divorce-laws-women’s-labor-outcomes
topicv3: Education, Skills Development and Labor
            Market m1326135 1484,Civil Law m1327064 1044,Gender and Economic Empowerment m1327622 911,Labor Supply m1504055 2751,Female Labor Market m1504222 2950
publishtoextweb_dt: 2024-01-09T00:00:00Z
dois: 10.1596/1813-9450-10661
origu: Off of Sr VP Dev Econ/Chief Econ (DECVP)
no_of_pages: 49
author_keys: 0: author_key: NA
1: author_key: NA
2: author_key: NA
3: author_key: 759184
model_extractions: Policy Research Working Paper 10661

# For Labor or for Divorce?

Unilateral Divorce Laws and Women’s Labor Outcomes _Najat El Mekkaoui Sara Loukili Yeganeh Fourouheshfar Nada Eissa_ Middle East and North Africa Region Office of the Chief Economist January 2024
Policy Research Working Paper 10661

# **Abstract**

Despite substantial progress in closing the gender gap, women’s labor force participation in the Middle East and North Africa remains one of the lowest globally, at a mere 18 percent. This paper investigates the effect of the introduction of unilateral divorce laws on women’s labor outcomes, using data from the Demographic and Health Survey program that spans decades and a quasi-experimental difference-in-differences design in three countries: Morocco, the Arab Republic of Egypt, and Jordan. The results highlight that no-fault divorce legislation was associated with a modest increase in mothers’ labor outcomes, measured by current employment, a few years after the reform. These findings are likely induced by a power shift and anticipatory effects that drive women into the labor force. However, when a longer time window is considered, 10 or more years after the reform, the study documents a negative effect of the reform on women’s labor outcomes in Morocco, and a positive effect in the Arab Republic of Egypt and Jordan. These differences can be attributed to a set of countervailing effects, including social norms, labor market dynamics, and evolution of the legislation, that make the derived utility from marriage, in some cases, more attractive than that derived from employment, and vice versa. These findings partially confirm results from previous research on the relationship between no-fault divorce and women’s agency and empowerment in the Middle East and North Africa region, but, at the same time, contrast with prominent perspectives on legislation that aims at reducing gender-based discrimination. Instead, they show that there might be undesired effects of legislation and provide a policy relevant discussion on that basis.

This paper is a product of the Office of the Chief Economist, Middle East and North Africa Region. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at najat.el-mekkaoui@dauphine.psl.eu or sara.loukili@dauphine.eu.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
_For labor or for divorce?_

# **For Labor or for Divorce?**

# **Unilateral Divorce Laws and Women’s Labor Outcomes**<sup>**1**</sup>

NAJAT EL MEKKAOUI<sup>2</sup> , SARA LOUKILI<sup>3</sup> , YEGANEH FOUROUHESHFAR<sup>4</sup> , NADA EISSA<sup>5</sup>

**JEL-Codes** : J12 ; J16 ; J22 ; D10 ; D13.

**Keywords** : Unilateral divorce, Labor force participation, MENA region, Morocco, Jordan, Egypt, Mothers, Intra-household bargaining.

> 1 The authors are grateful and thank Nelly Elmallakh, Nazmul Chaudhury  and Daniel Halim  for their helpful suggestions and comments. This work was supported by the MENA Chief Economist Office under the labor and gender research programs (TTLs: Nelly Elmallakh and Nazmul Chaudhury). It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The author(s) may be contacted at <u>najat.el-mekkaoui@dauphine.psl.eu or sara.loukili@dauphine.eu.</u>

> 2 Université Paris- Dauphine PSL LEDa DIAL IRD, EMANES and ERF.

> 3 Université Paris-Dauphine PSL, LEDa DIAL IRD, EMANES.

> 4 The Euro-Mediterranean Economists Association (EMEA), EMANES and LEDa DIAL IRD.

> 5 Georgetown University, ERF, and the National Bureau of Economic Research (NBER).
_For labor or for divorce?_

# **1. Introduction**

One of the most persistent and salient features of labor markets in the Middle East and North Africa (MENA) region is that women participate significantly less than men despite substantial reduction of the gender education gap (Assaad et al., 2020) –the average female labor force participation rate in the region is a mere 18 percent (WDI, World Bank, 2021). For example, in Morocco only 23 percent of women participate in the labor market and this rate is even lower for countries like Jordan where it did not exceed 13 percent in 2021. Under the canonical collective household model, marriage markets and legislations governing divorce influence the labor supply of spouses and the intrahousehold decision process (Chiappori et al., 2002; Fernandez and Wong, 2014; Field et al., 2021). While a large body of literature has studied the consequences of the introduction of more liberal divorce laws on intrahousehold distribution of bargaining power and labor supply within the collective household labor supply framework (Chiappori, 1988; 1992; Apps and Rees, 1988), less is known about MENA region countries in this regard. Particularly in circumstances where traditional gender roles prevail as social norms and where women possess limited influence or bargaining power within the marriage, their choices regarding work may not be adequately acknowledged or facilitated (Alesina, 2013; Qian, 2008; Jensen, 2012; Heath and Mobarak, 2015; Jayachandran, 2015; 2021).

**Figure 1. Relationship between gender progressive laws and FLFP by Country**

<!-- Start of picture text --> 10 20 30 40 50<br>FLFP rate<br> MENA OECD East Asia Europe Central Asia<br> South Asia Sub-saharan Africa Latin America Fitted values<br>100<br>80<br>60<br>WBL_Index<br>40<br>20<br><!-- End of picture text --> Source: Authors from World Bank, Women, Business, and the Law (2023) database. Note: Used data comes from the World Bank’s time series on Women Business and the Law index (1971-2023) for 122 countries belonging to the MENA, OECD high-income, South Asia, Latin America, East Asia, Sub-Saharan Africa, and Europe and Central Asia regions. The latest year, 2023, is considered. The index scores are based on the average of each economy’s scores for the 8 topics included in the aggregate score: mobility, workplace, pay, marriage, parenthood, entrepreneurship, assets, and pension. The index scores range between 0 and 100 and a higher score indicates more gender equal laws. The corresponding values for female labor force participation rate for each country are from the World Bank, World Development Indicators database.

2
_For labor or for divorce?_ An institutional environment favorable to women (as illustrated by figure 1), such as nofault divorce laws, coupled with increased chances of success in marriage markets<sup>6</sup> or the possibility of accessing the labor market in the event of a divorce, would influence intrahousehold decision-making processes, even if a divorce does not ultimately occur (Duflo, 2012). Hence, divorce and marriage legislation can exert a substantial influence on these power dynamics and effectively boost women's participation in the labor force. This paper investigates the effects of divorce legislation reforms on women’s labor outcomes in three MENA region countries: Morocco, the Arab Republic of Egypt, and Jordan. At varying dates during the late 1990s and early 2000s, MENA region countries consecutively introduced different forms of unilateral divorce and child custody legislation reforms (Welchman, 2007; Appendix A). These reforms allowed women to easily access divorce without having to prove fault nor require consent of spouse. In past research, Hassani-Nezhad and Sjögren (2014) investigated a similar question using cross-country variation in the timing of introduction of unilateral divorce between 18 MENA countries using aggregate data and focusing on younger women’s labor force participation in comparison to women in relatively older age groups. They showed that the entry into force of unilateral divorce laws effectively increased labor force participation of younger women. Using a different empirical strategy and employing individual panel data, we investigate the effects of unilateral divorce and custody legislation reforms on women’s labor outcomes by exploring differences between women who are more or less affected by the reform. Instead of exploiting cross-country variations, we purposefully isolate estimates for one country at a time to assess how context-dependent the findings can be. In fact, a growing body of literature has shown that the relationship between intrahousehold distribution of bargaining power, social norms on gender roles, and labor supply is context-dependent, especially as far as developing countries are concerned (Duflo and Udry, 2004; Ashraf et al.,2009; 2014; 2016; Bau, 2016; Heath and Tan, 2020; Field et al., 2021). Moreover, by using micro data, we explore pathways between micro-level gender-based discrimination and inequalities and macro-level outcomes, adding to the growing micro-founded literature that relates

> 6 Marriage markets in countries of the Middle East and North Africa differ from other countries where most research on the canonical collective household labor supply is developed and can be characterized by underdevelopment and missing markets (Anukriti and Dasgupta, 2017). Marriage rates are substantially higher, mate selection often involves family arrangements, divorce legislation is limiting to women and social norms about gender roles tend to determine spousal relations.

3
_For labor or for divorce?_ gender inequalities to macroeconomic growth and development outcomes (Seguino, 2010; 2013; 2020; Santos Silva and Klasen, 2021).

Women face several barriers to enter the labor force, including discriminatory labor laws, inadequate maternity leave policies, and very limited legal social protection against workplace harassment and gender-based violence (World Bank, 2021). Cultural factors also play a significant role, as traditional gender roles and societal expectations often discourage women from pursuing careers and limit their mobility (Jayachandran, 2015; Heath and Tan, 2020; Field et al., 2021). As such, deeply ingrained stereotypes, and biases, still highly present in the MENA region, perpetuate the belief that women are primarily responsible for household chores and child-rearing, creating an unequal burden of unpaid work and limiting their ability to engage in paid employment. On a macroeconomic level, and throughout the economic literature, the U-shaped labor force participation curve hypothesis is a stylized depiction of the relationship between female labor force participation and economic development (Goldin, 1995). Although this hypothesis is widely spread in cross-country analysis of the subject, some studies such as Gaddis et. al (2013) or Eastin & Prakash (2013) find no or weak evidence of this relationship. They conclude that an S-shaped relationship is more likely to exist and that through this paradigm, the “dangers of the middle phase” should urge to put in place new norms and new institutions promoting women in the workforce (Eastin & Prakash, 2013). Thus, at a macro-level, economic and institutional barriers combine to create a complex web of challenges that impede female labor force participation, exacerbating gender inequalities and hindering economic growth and development as whole.

At a micro-level (individuals and households), women’s labor force participation is found to have an inverse U-shaped function of bargaining power (Moeeni, 2019). Accordingly, the importance of intra-household bargaining power dynamics to female labor force participation decisions can be explained by the not-so-rare men’s opposition to the labor participation of their spouses. Asaad and al. (2017) show that women’s employment in the MENA region is affected by early marriage and find that marriage by the median age reduces the probability of working for women. In this regard, the reform of legislation on divorce can constitute a strong shock to the risk of divorce making it easier and, subsequently, altering the perceived risk of marital dissolution which alters intrahousehold relations and decisions (Stevenson and Wolfers, 2006; Stevenson, 2007; Alesina and Giuliano, 2007). Literature suggests that enhancing the overall legal framework potentially increases women’s bargaining power within the household, 4
_For labor or for divorce?_ making their divorce threats more credible in case of conflict. Moreover, altered marriage contracts arguably provide women with incentive to supply labor and remain in the labor market through many channels. Chiappori et al. (2002) find evidence of a shift to higher female bargaining power intra-household and El Lahga and Moreau (2007) suggest lower degrees of specialization in domestic production. Drawing on this strand of literature, our central hypothesis is that divorce legislation reform should increase women’s bargaining power during the marriage, potentially, allowing more women into the labor market.

To test this argument, we construct a pseudo-panel of mothers that we assign to treatment and control groups based on the ages of their youngest child. Using data from the Demographic and Health Survey (DHS) program that spans over decades and a quasiexperimental difference-in-differences design, we assess how the implementation of the right to unilateral divorce affects women's labor outcomes in Morocco, The Arab Republic of Egypt, and Jordan. We follow cohorts of “treated” mothers for several periods before and after the reform thus including the short-term and long-term effects of legislative reforms on women’s socio-economic position. Our findings suggest that there are two main mechanisms: a power-shift effect and an anticipatory effect.

Our results show that the power-shift effect is most prevalent impacting mainly married mothers with children below the legal age-custody cutoff, for whom divorce is less costly. However, this effect can be offset by higher costs in the labor market that remain barriers to women’s labor marketization. This study contributes to the literature on the effects of divorce, child custody and alimony legislation on women’s labor outcomes (Parkman, 1992; Gray, 1998; Bremmer and Kesselring, 2004; Genadek et al., 2007; Stevenson, 2008; Bargain et al., 2012; Hassani- Nezhad and Sjögren, 2014; Fernández-Kranz, 2022; Corradini and Buccione, 2023). Additionally, it shows how the effects of legislation are heavily dependent on context, be it social or economic. The following section briefly summarizes the institutional and legal background of the reform in Morocco, The Arab Republic of Egypt, and Jordan. Section 3 presents the conceptual framework. Section 4 describes the empirical strategy and data used, while section 5 summarizes the results and provides a discussion, and section 6 concludes.

5
_For labor or for divorce?_

# **2. Institutional Background**

Divorce legislation in the Middle East and North Africa region is a part of a broader Family Code that covers issues including inheritance, marriage, divorce, alimony, child custody and child-support, among other personal status dispositions. Family structures in these countries are characterized by a prevalence of patrilineality, and social order is thus based on the superiority of men in terms of rights and power. This system of kinship and the important place reserved for the code of honor have cemented the family and are one of the possible explanations for the persistence of certain customs and traditions favoring the traditional role of women to their participation in the workforce. Historically, family laws in these countries treat women and men separately with often unequal dispositions, such as access to divorce. Against this backdrop, the introduction of unilateral divorce provisions has fundamentally changed one side of the relational balance between the sexes, by granting women a right that was previously available only to men (Welchman, 2007; Engelcke, 2019). They additionally, empowered women to exercise greater control over their marital status, seek divorce on their terms, and secure their economic wellbeing after divorce. For reference, figure 1 in Appendix A shows a timeline of introduction of unilateral divorce reforms in select MENA countries as well as child custody dispositions and age cutoffs related to child custody alimony. Additionally, figure 2 in Appendix A shows the evolution of divorce rates in The Arab Republic of Egypt, Morocco, and Jordan, which are relatively more stable than in the years preceding the increase of child custody age in all three countries. We provide more discussion on the relevance of this observation in section 3 on the conceptual framework. Let's first examine the major changes in the family codes.

_The Arab Republic of Egypt_ . The reform of family laws, in 2000, introduced significant changes that integrated new rights for women within the family (Welchman, 2007). One of the key advancements was the establishment of the " **_Khul_** " divorce provision. This provision allows women to initiate divorce by returning their dowries or financial compensation to their husbands, without having to prove fault or seek their consent. Moreover, the reform addressed the issue of financial support for women after divorce. It introduced the concept of " **_nafaqa_** ," which refers to the right of divorced women to receive financial maintenance from their ex-husbands for a specified period. This provision ensures that women are not left financially vulnerable after divorce and helps to protect their economic well-being. Additionally, the reform emphasized the importance 6
_For labor or for divorce?_ of child custody. It recognized the mother's **_primary_** right to custody of her children, particularly for younger children, unless it is determined to be against their best interests. In case of a divorce, the mother obtains custody of a male child up to the age of 10, and of a female child up to the age of 12 years (article 20). An amendment to this article in 2005 raised the age of custody to 15 for girls and boys, without distinction. Throughout the duration of custody, the non-custodial parent (father) must pay a pension to the guardian mother to compensate her for the care given to the children.

_Morocco_ . In 2004, a new Family Code<sup>7</sup> that expanded women's rights and responsibilities was introduced. The law received positive international coverage and aligned with Morocco's international commitments, namely the CEDAW (see Charrad, 2012; Sadiqi, 2013). The new Family Code enshrined equal rights and duties for both spouses. The rule of "the wife's obedience to her husband" was abandoned, women no longer needed a matrimonial guardian, the age of marriage was set at eighteen for both sexes, instead of fifteen for girls in the previous Code, and polygamy became subject to such conditions that it was made very difficult. In terms of divorce proceedings, the new Code introduced a form of unilateral divorce that is on grounds of discord and open to both spouses “ **_Chikak_** ”. This provision empowers women to dissolve their marriages without proof of fault. In the event of marital dissolution, even under the “Chikak”, custody of the children reverts **_primarily_** to the mother, then to the father, then to the maternal grandmother. Custody must be guaranteed by decent housing and pension by the non-custodial parent (articles 163 et 167) and lasts until the child reaches the age of legal majority, whether male or female. Then, the child may, at the age of fifteen, choose which of his or her parents will assume custody (article 166). Overall, the introduced reforms of family laws in Morocco in 2004 marked a significant advancement in women's rights within the family.

_Jordan_ . Despite social and political resistance<sup>8</sup> the first amendment of the Personal Status Law, in 2001, by Royal Decree, introduced notable changes including raising the minimum marriage age, restricting polygamy, enhancing custody rights for women, and granting them access to a form of unilateral divorce. The later provision was deemed rather conservative since it still required women to relinquish some or all their financial rights. The amendment still failed to pass in parliament in 2004 and it wasn’t until 2010 that

> 7 Family Code of February 5, 2004.

> 8 Harris, Kelli M. M. (2015): Personal Status Code Reform in Jordan: State Negotiations and Women's Rights in the Code. Washington: Georgetown University. <u>https://repository.library.georgetown.edu/bitstream/handle/10822/760898/Harris_georgetown_0076M_12957.pdf ?sequence=1&isAllowed=y</u>

7
_For labor or for divorce?_ unilateral divorce was passed under **_‘Tafriq lil iftida’_** or **_‘Iftida’_** but remained subject to payment of a “ransom” by the wife in exchange for marriage dissolution (Jordanian Personal Status Law, section 4, Article 114). After 2010, under the new Personal Status Law, mothers are entitled to child custody until the youngest child reaches the age of 15 (article 126-127) while fathers remain sole legal guardians. No distinctions are made between female and male children in terms of custody, alimony, and visitations. Child support, or pension, in the event of divorce, must remain compatible with the financial responsibility of the father during the marriage with the additional provision for the accommodation of the custodial parent (mother) or the person having custody of the children (Articles 63, 189 and 179).

Provided this institutional background, and to obtain an understanding of the mechanisms through which divorce legislation reform affects women’s labor outcomes, the next section presents the conceptual framework behind our identification strategy.

8
_For labor or for divorce?_

# **3. Conceptual Framework**

The introduction of the right to unilateral divorce is conceptualized as a tool to increase women’s bargaining power within and outside marriage. It affects their welfare at the time of divorce as well as the division of labor within the marriage. Such state-level intervention, by the legislator, can reduce uncertainty related to personal and financial security of women and their children, in the event of a divorce, and increases their bargaining power within the marriage (Stevenson, 2008). It can potentially shape an important feature of women’s empowerment: labor force participation. In the context of the MENA region, the introduction of no-fault divorce laws explicitly targeted women since men had the right to ‘unilaterally’ divorce prior (Welchman, 2007; Hassani-Nezhad, and Sjögren, 2014), whereas a woman seeking a divorce had to obtain her husband's consent (i.e., prove fault), making it a suitable setting to conduct a difference-indifferences analysis. This section presents the conceptual setting behind our empirical strategy.

## _3.1.Unilateral divorce laws and the formation of labor supply decisions_

Laws can influence the decision-making process of individuals (Basu, 1998; Posner, 2002; Duflo, 2012; Bau, 2016; Acemoglu and Jackson, 2017). Divorce legislation, specifically, can alter marriage formation, dissolution (divorce) and bargaining within the marriage (Stevenson, 2008). In the event of a divorce, they affect the income levels and property rights of ex-spouses. Within the course of the marriage, they influence the relative distribution of bargaining power, at least insofar as divorce remains a viable and credible threat benefitting the spouse who has higher gains from exiting the marriage. As such, legislative dispositions on alimony, child support and property division can redistribute power within marriage. Rasul (2006) underlines that the analysis of unilateral divorce laws’ effects must distinguish between _‘pipeline effects’_ , which concern the stock of couples married before the introduction of the right to unilateral divorce, and _‘selection effects_ ’, which concern the matching outcomes of couples married after the reform. We locate the unilateral divorce reform’s ability to influence women’s labor outcomes as captured by the _pipeline effects_ . For this, we restrict our analysis to behavior changes for women who were married and had children prior to the reform.

We assume that the introduction of the right to unilateral divorce can affect women’s labor outcomes through two distinct mechanisms: a power-shift effect and an 9
_For labor or for divorce?_ anticipatory effect. The Power-shift effects consist of changes in bargaining power in favor of women and within the framework of the marriage contract. This shift in marital bargaining power affects intra-household behaviors and can increase women’s decisionmaking power on different dimensions including children’s education, well-being, savings, and labor supply (Heggeness, 2019; Garcia-Ramos, 2021). Stevenson (2007, 2008) posits that the decision to increase own (woman’s) labor supply comes due to decreased investments (specialization<sup>9</sup> ) in marriage-specific capital (Stevenson, 2007; Bonnet et al., 2021). The power-shift effect is among the most covered by literature documented by collective labor supply models (Chiappori, 1988; 1992; Apps and Rees, 1988; Voena, 2015; and others). Anticipatory effects, on the other hand, contribute to an increase in women’s labor supply in anticipation of marriage dissolution. Bargain et al., (2012), for instance, argue that if employment contributes to securing women’s outside financial options, an anticipation of marriage dissolution (divorce), due to marital conflict, can lead women to increase their labor supply. They find an acceleration in marital dissolutions and, as a response to increased risk of divorce, they point out convincing evidence that women’s labor supply in Ireland increased following the introduction of the right to no-fault divorce in 1996. Thus, following the introduction of the right to unilateral divorce laws in the studied countries, Morocco, The Arab Republic of Egypt, and Jordan, our first set of hypotheses find basis in both a power-shift and anticipatory effects:

**Hypothesis 1a:** _All else being equal, the introduction of the right to unilateral divorce increases women’s bargaining power which they use to increase their labor_ - _supply, among other potential decisions (power shift effect)._

**Hypothesis 1b** _: All else being equal, women’s labor supply increases upon the introduction of the right to unilateral divorce in anticipation of eminent divorce (anticipatory effect)._

These two hypotheses consider divorce as a viable outside option that is more likely, than not, to happen in the event of a threat point. In other terms, they can be traced back to literature on non-cooperative game theory where spouses may have higher preference for self-enforcing, self-serving agreements, such as the Nash-equilibrium (Manser and Brown, 1980; McElroy, 1990; Lundberg and Pollak,1994). Both hypotheses stem from a

> 9 There is documented evidence in the case of the US that both men and women decrease domestic work and increase labor market work following the introduction of unilateral divorce laws (see Roff, 2017).

10
_For labor or for divorce?_ power-shift dynamic that favors higher female labor supply, but while the first (1a) posits women stay married, the second (1b) is linked to marital dissolution.

# _3.2.Unilateral divorce laws and distribution of bargaining power within the marriage_

Within the setting of MENA region countries, there are potential countervailing mechanisms which may offset the power-shift and anticipatory effects, such as social norms that limit the prevalence of divorce, of women’s labor supply, and place higher value on their traditional roles (Jayachandran, 2021; Heath and Tan, 2020; Field et al., 2021),

**Hypothesis 2a** _: All else being equal, women’s labor outcomes do not change in the period post-introduction of the right to unilateral divorce._

A woman’s deterrence from the labor market could also be a result of higher utility cost derived from working. In this case, women face more constraints in the labor market pertaining to job search costs, restrictive labor legislation, and absent or limited offer in childcare markets, among other constraints that are not subject to advancements in legislation pertaining to divorce per se.

**Hypothesis 2b** _: All else being equal, women’s labor outcomes increase during the early stages of the law reform, as bargaining power increases within household, but eventually revert (dissipate) as woman are deterred by higher costs in the labor markets._

The first countervailing force is related to the idea that women can internalize longstanding social norms that place lower value on women’s work (Akerlof and Kranton, 2000). Despite having outside options, women may choose to halt their labor supply to stay in the marriage. Thus, having divorce as a viable option can enhance a woman’s position and bargaining power within the marriage without leading her to participate in the labor market, especially when marriage is preferred to labor for social or economic reasons.

As family laws and legislation on divorce enhance their position within the marriage, women may prefer marriage to labor participation, especially should the later be a source of marital conflict that can increase the chances of marital dissolution. Moreover, the passing of legislative dispositions that grant women and their children more rights in case 11
_For labor or for divorce?_ of marriage dissolution do not guarantee that they will be reinforced. Although no-fault divorce procedures are less costly, timewise, and financially, women may prefer to stay in the marriage to labor participation, namely in the case where they fear they will not receive alimony from ex-spouse. Finally, there are also equally higher costs related to loss of economies of scale and risk sharing opportunities, in case of marriage dissolution, and to job search which may increase the utility cost of labor supply, especially for highly educated women that can abstain from labor in case of mismatch in labor markets (Veona, 2015; Klasen, 2019).

**Hypothesis 3** _: All else being equal, women’s labor supply is affected by structural frictions economywide._

Ultimately, apprehending the effect of legislation on women’s labor outcomes is only relevant if it is considered within the framework of structural transformations that occur economywide. As economies develop and transition from traditional to service-based sectors, women’s labor supply is affected at both the intensive and extensive margins (Goldin, 1995; Herrendorf et al., 2014; Ngai et al., 2017; 2021; Dinkelman and Ngai, 2021). That is, women can marketize their home production and increase both their labor supply and time spent doing paid labor. Moreover, legislative, and socio-normative progress that favors women’s agency and bargaining power is only relevant if economic structures are developed enough to reallocate labor from the least productive sectors, such as agriculture, to more human capital-intensive sectors, such as services (Maddison, 1980; Ngai and Pissarides 2008; Rogerson 2008), where women tend to also have an advantage in both high-skilled and low-skilled labor (Bridgman et al., 2018). As such, legislative reforms cannot directly address labor and time misallocations that exist in the economy, and, thus, increase employment creation in sectors and occupations that are suitable, and even favorable to women. In a way, they contribute to countervailing the power-shift and anticipatory effect dynamics, we presented earlier, by increasing the utility cost of labor participation, as opposed to that of marriage, especially when economies don’t provide employment opportunities suitable for educated women. In fact, as women increase their educational attainment, their utility cost of engaging in low-skilled occupations rises as well (Olsen & Mehta, 2006; Klasen & Pieters, 2015). This is particularly relevant if economic growth is concentrated in male-dominated sectors, such as construction and transport, or traditional sectors, such as agriculture. Although this study does not directly address the role of structural transformations and sectoral 12
_For labor or for divorce?_ reallocations in increasing women’s labor force participation, the fact that the period studied spans at least 20 years means that there are underlying economy-wide factors that have changed and may be responsible for a significant proportion of the observed effects. Failure to take these into account when interpreting the results risks overestimating the role of legislation.

13
_For labor or for divorce?_

# **4. Empirical Strategy**

Unilateral divorce laws gave women the right to file for divorce without having to prove fault, which was not possible prior in Morocco, The Arab Republic of Egypt, and Jordan. Their effects, however, are not necessarily the same for all women. In case of marriage dissolution, mothers of young children aged below an age cutoff set by legislators, are usually primarily assigned custody of their children, and guaranteed a legal right to child support from the non- custodial parent, even if the mother was to forfeit some of her financial rights to obtain the divorce. By contrast, mothers of children above the age custody cutoff run the risk of losing their child custody along with any financial support that may come with it. We exploit this setting to conduct a quasi-experimental differencein-differences strategy comparing the effect of unilateral divorce reform on mothers who are more or less affected by the reform.

## _4.1.Empirical setting and assignment to treatment_

Periods before and after the introduction of the right to unilateral divorce in Morocco, The Arab Republic of Egypt, and Jordan are analyzed. For this, a comparison is made between the change in labor outcomes between mothers of children younger than the age-cutoff for custody and mothers of children older than the same age-cutoff, and whom should be less favored by the reform. Are assigned to treatment women for whom the age of the youngest child is below the legal age cutoff for child custody in each country. In Morocco, this age-cutoff is set to 15<sup>10</sup> for both boys and girls, in The Arab Republic of Egypt, it was first set to 10 for boys and 12 for girls in 2000 and then raised to 15 for both in 2005<sup>11</sup> and in Jordan it was raised to 15<sup>12</sup> for both sexes after 2010. Mothers, whose youngest child is older than the age-cutoff are assigned to control groups.

In all specifications, panel fixed effects methods to estimate the magnitude of the relation between unilateral divorce laws and outcomes of women’s labor are considered : i (p i i ii ii jj ii ii<sup>) + β+ ττ</sup> ii<sup>. ii+ εε</sup><sup>**(1)**</sup> YY = αα + θθ + δδ ppii . iit ttiit

> 10 Article 166 the Moroccan family code (Moudawana) of February 5, 2004. See unofficial family code translation here <u>http://www.hrea.org/wp-content/uploads/2015/02/Moudawana.pdf</u> 11Amendment to the law No. 25 of 1929 in 2005. (Art. 1 of Law No. 4). See Bernard-Maugiron, 2022.

> 12 Article 170, 173 of the Personal Status Law.  For more details, see UNESCWA report here - <u>https://www.unescwa.org/sites/default/files/event/materials/jordan adjusted.pdf</u>

14
_For labor or for divorce?_ where i is the observed outcome, a binary variable of a woman being _‘currently employed’_ , p is a variable indicating whether the examined period is before or after YY the year of the reform, and ii ppii treatment at the time of the introduction of the reform. Each specification includes an ii<sup>indicates whether the woman was exposed to</sup> iit ttiit interaction of these two terms along with a set of control variables i , including the woman’s own and partner’s educational attainment, age, age at first marriage, and ββ number of children, and vectors of individual ( ) and year ( ) fixed effects. Some specifications include additional control variables, as well as age and age at first marriage ii ii αα θθ time trends that interact the current age and age at first marriage of the woman with the p indicator. Additional control variables on micro and macro levels are later included to account for variations in household structures, social and legal norms. To address ii ppii concerns about serial correlations resulting in downwardly biased errors and overrejection of the null hypotheses (Bertrand et al., 2004), the wild bootstrap approach is employed (Cameron et al., 2008).

Figures 3 and 4 plot basic trend inspections for divorce rates and labor outcomes for women who would have been assigned to either treatment or control groups in the sample. In terms of divorce rates, ‘treated’ groups show relatively higher divorce rates that continue to rise after the introduction of the reform. For Jordanian women sample, there is a trend reversal after the introduction of the divorce and child custody reforms in 2001 between the ‘treated’ and ‘control’ groups, attesting to the existence of a strong ‘pipeline effect’ predicted in the conceptual framework. In terms of labor outcomes, the trend inspections illustrate a reduction in the gap between the ‘control’ and ‘treatment’ groups in the cases of Jordan and The Arab Republic of Egypt with an interesting drop for ‘treated’ women in the case of Morocco.

The used empirical specification yields a difference-in- differences design, which still requires an assumption of parallel-trends to imply causal-inference. In this framework, the parallel-trends assumption implies that the average change in labor outcomes for “treated” women in absence of the reform would have followed similar trend to the counterfactual average change in labor outcomes for the “control” group. Since we cannot accurately test for a parallel-trends assumption, we instead apply a more testable “common trends” assumption (Blundell et al., 2004; Mora and Reggio, 2017, Roth et al., 2023) and address this issue later.

15
<!-- Start of picture text --> (a) Share divorced women - Morocco<br>0,16 i<br>0,14 i<br>!<br>-<br>0,12 4 —== -<br>0,08 = --7 - pane<br>0,06 -_-<br>0,04 oe> _---4-1<br>- !<br>0,02<br>!<br>) !<br>1992 2003 2004 2007 2014<br><!-- End of picture text --> <!-- Start of picture text --> (b) Share divorced women - Egypt<br>0,16<br>0,14 '<br>1<br>7 XN Il<br>0,12 Ay<br>0,08 fy \ Sg-7 Pd ob _ — ~<br>7 XX + - ~~<br>0,0 46 \y-i ~.<br>!<br>0,02<br>!<br>0 1<br>1989 1992 2000 2005 2008 2014<br><!-- End of picture text --> <!-- Start of picture text --> (c) Share divorced women - Jordan<br>0,12<br>0,1<br>0,08 4<br>0,06 h -7<br>‘N<br>0,04 \ - v—a —<br>0,02 ~ a‘N XN f-o- =- - 4 7 y, ~~. & =~ 4<br>0)<br>1990 1997 2001 2007 2009 2012<br>year<br><!-- End of picture text -->
<!-- Start of picture text --> (a) Share currently working women - Morocco<br>0,45 |<br>0,350,4 ere =<br>0,3 a -<br>-— --" An-~=--.<br>0,25 — — —=~— - ' s @<br>= = ; 7 rd<br>0,2 -<br>~-.----4<br>0,15<br>0,1<br>0,05<br>0<br>1992 2003 2004 2007 2014<br><!-- End of picture text -->

<!-- Start of picture text --> (b) Share currently working women - Egypt<br>0,45 ;<br>0,350,4 . — - ae<br>m~<br>0,3 iN<br>be ' ~<br>0,25 i. i ' -~.<br>I io — al —_— —_<br>0,2 ~-<j{l7>><br>0,15 ~<br>0,1 |<br>0,05 !<br>0<br>1989 1993 2005 2008 2014<br><!-- End of picture text -->

<!-- Start of picture text --> (c) Share currently working women - Jordan<br>0,25<br>1<br>0,2<br>-27<br>ae lie” -<br>>< a rr<br>0,1 e -eE— — =I<br>!<br>0,05<br>1<br>fe)<br>1990 1997 2001 2007 2009 2012<br>—e—Control,mean —@®=—Treatment, mean<br><!-- End of picture text -->
_For labor or for divorce?_

# _4.2.Data and working samples_

The main source of data is repeated cross sections of nationally representative household and individual surveys for the period 1987-2017 from the Demographic and Health Surveys (DHS). Additionally, two cross-sectional data sets from the Household Consumption Expenditure Survey by the High Commission for Planning (HCP) are used in the case of Morocco, where the DHS survey was not conducted (ie: for 2007 and 2014, the latest available waves of the survey).

**Table 1 - Data Source used per country**

|**Data Sources**|**Before reform**|**After reform**|
|---|---|---|
|Morocco|DHS 1992 and 2003|HCP Household survey 2007 and 2014|
|Egypt, Arab Rep.|DHS 1988, 1992, 1996|DHS 2003, 2005, 2008, 2014|
|Jordan|DHS 1990, 1997|DHS 2002, 2007, 2009, 2012, 2017|

_Source: Authors._ In analyzing women’s labor outcomes, we collect respondents’ answers to the question ‘are you currently working’. This question does not just measure labor force participation but, rather, also current occupation in a ‘paid labor’ position at the time of the survey. This means that we avoid the bias of having high unemployment rates in the estimations and limit our results to the effective employment outcome of ‘treated’ mothers for a given year.

In the case of Morocco, the DHS survey is completed by equally nationally representative data for the years 2007 and 2014 from the High Commission for Planning (HCP). To harmonize the DHS data and HCP Household Consumption Expenditure Survey, as in the latter there is no information on the number of births by women, we construct variables on children based on the age of the youngest member of the household. As with DHS data, only married, widowed or divorced women are taken into account.

Next, to study longitudinal effects of unilateral divorce reforms on women’s labor outcomes, we build a pseudo-panel based on repeated cross-sectional surveys for several periods before and after the date of the reform. We follow cohorts of women that share two timeinvariant characteristics, namely gender and year of birth, and make sure that each cohort is large enough to reduce measurement errors (see Verbeek and Nijman, 1992, 1993; Deaton and Paxson, 1994; Gardes et al., 2005). The sample is also restricted to women between the ages of 18 and 49, based on the demographic trends for prime ages for marriage, childbearing, and entrance to the labor market (Dhillon, and Yousef, 2011; Assaad et al., 18
_For labor or for divorce?_ 2022; Gilbert and Ben Brik, 2022). To account for potential endogenous fertility choices postreform period, specifically women choosing to have more children to extend child custody period, we systematically restrict the sample to married women who stopped having children one year before the reform ( _the pipeline effect,_ (see Rasul, 2006)). The analysis spans over sufficiently long time periods (over 20 years for each country) to apprehend the effect of unilateral divorce legislation on spouses’ behavior (Jolls et al., 1997; Chiappori et al., 2002) with at least two periods before and two after the year of the reform.

**Table 2 – Descriptive statistics of full and working sample pre and post Chikak reform in Morocco**

||Mean<br>JK<br>(1)|<br>Pre-reform<br>J<br>(2)|K<br>Post-reform<br>J<br>(3)|K<br>Control<br>(post-reform)<br>J<br>(4)|K<br>Treatment<br>(post-reform)<br>(5)|
|---|---|---|---|---|---|
|**Marital status**||||||
|Married|0.89|0.87|0.90|1|1|
|Divorced/seperated|0.07|0.09|0.04|0|0|
|**Demographics**||||||
|Age|35.13|35.01|35.21|36.13|36.17|
|Age at first marriage|19.52|19.39|20.1|20.56|20|
|Number of children|2.61|3.31|2.14|1.39|2.53|
|Number of children under 5|0.85|0.87|0.72|0|0.93|
|Number of household members|<br>4.79|5.36|4.40|2.80|4.80|
|**Educational attainment**||||||
|No Education|0.56|0.65|0.49|0.51|0.48|
|Primary|0.20|0.15|0.24|0.21|0.26|
|Secondary|0.17|0.15|0.18|0.17|0.15|
|Higher|0.05|0.03|0.06|0.07|0.06|
|**D. Outcome variables**||||||
|Currently working|0.26|0.21|0.28|0.28|0.26|
|**N**<br>Source: Authors Calculations – D|19024<br>emographi|7645<br>c and Health Surv|11379<br>ey (DHS): Morocco|1239<br>(1992,2004) and HCP|5790<br>Household survey|

Source: Authors Calculations – Demographic and Health Survey (DHS): Morocco (1992,2004) and HCP Household survey (2007 and 2014).

Note: This table displays full and working sample means for several variables both pre and post Chikak divorce reform in Morocco. For the first three columns, we present full sample means pre and post reform. The remaining columns present working sample means for treatment and control groups. While the table shows means values for treatment and control groups post “treatment”, the empirical analysis employs a quasi-experimental framework that takes into consideration values for pre and post reform.

Tables 2, 3 and 4 display instructive descriptive statistics on the periods prior and post the introduction of the right to unilateral divorce. The main outcome variable is a dummy variable “currently working” which takes the value of 1 if the woman is employed at the time of the interview, and 0 otherwise. This variable is the most accurate representation of women’s labor market position. Between the pre and post reform periods the raw mean of women that declared being currently employed stagnated for The Arab Republic of Egypt 19
_For labor or for divorce?_ but increased relatively for the samples of Moroccan and Jordanian women. Between the groups assigned to treatment and control.

**Table 3 - Descriptive statistics of full and working sample pre and post Khul' reform in Egypt, Arab Rep.**

||Mean<br>JK<br>(1)|<br>Pre-<br>reform<br> <br>(2)|JK<br>Post-<br>reform<br>(3)|JK<br>Control<br>(post-reform)<br>J<br>(4)|K<br>Treatment<br>(post-reform)<br>(5)|
|---|---|---|---|---|---|
|**Marital status**||||||
|Married|0.95|0.94|0.95|1|1|
|Divorced/seperated|0.31|0.04|0.02|0|0|
|**Demographics**||||||
|Age|33.64|33.9|33.5|36.16|35.22|
|Age at first marriage|19.8|18.8|20|20.46|19.71|
|Number of children|2.93|3.5|2.77|1.80|3.27|
|Number of children under 5|0.88|1.03|0.84|0|0.71|
|Number of household members|4.93|5.53|4.76|3.76|5.28|
|**Educational attainment**||||||
|No Education|0.29|0.43|0.25|0.28|0.30|
|Primary|0.16|0.30|0.12|0.14|0.13|
|Secondary|0.42|0.19|0.48|0.42|0.44|
|Higher|0.12|0.06|0.13|0.14|0.11|
|**Outcome variable**||||||
|Currently working|0.19|0.19|0.19|0.22|0.22|
|**N**|54829|12096|42733|7359|16115|
|Source: Authors calculations – De<br>Note: This table displays full and w<br>in Egypt. For the first three colu<br>present working sample means fo<br>and control groups post "treatmen<br>consideration values for pre and p|mographic an<br>orking samp<br>mns, we pres<br>r treatment a<br>t", the empir<br>ost reform.|d Health Surv<br>le means for<br>ent full samp<br>nd control gr<br>ical analysis e|ey (DHS) – Egy<br>several variable<br>le means pre a<br>oups. While the<br>mploys a quasi|pt (1988, 1992, 1993,<br>s both pre and post Kh<br>nd post reform. The r<br>table shows means va<br>-experimental framew|2005, 2008, 2014).<br>ul' divorce reform<br>emaining columns<br>lues for treatment<br>ork that takes into|

The similarities in demographic and educational attainment characteristics between cohorts of women assigned to treatment and control groups are also noteworthy. Interestingly, advancements in educational attainment over the studied periods for all three countries are similar between control and treatment groups attesting to the MENA paradox hypothesis (Assaad et al., 2020). Also, similar fertility patterns in all three countries are noted between the two periods, hinting to the fact that they have all undergone similar socioeconomic transformations during the studied period. To assess the effect of legislative reform on women's employment outcomes, we provide a twoperiod analysis: the first probing the "immediate" effect of reform, and the second probing the "lagged" effect on women's employment outcomes. The "immediate" effect would be equivalent to a shock effect of the reform, while the "lagged" effect would represent the evolution of social norms and behaviors over a longer period.

20
_For labor or for divorce?_

**Table 4 - Descriptive statistics of full and working sample pre and post Iftida’ reform in Jordan**

||Mean<br>JK<br>(1)|<br>Pre-reform<br>J<br>(2)|K<br>Post-reform<br>JK<br>(3)|<br>Control<br>(post-reform)<br>J<br>(4)|K<br>Treatment<br>(post-reform)<br>(5)|
|---|---|---|---|---|---|
|**Marital status**||||||
|Married|0.97|0.98|0.96|1|1|
|Divorced/seperated|0.019|0.018|0.19|0|0|
|**Demographics**||||||
|Age|33.9|32.8|34.12|37.88|33.18|
|Age at first marriage|20.74|19.3|21.02|20.12|22.4|
|<br>Number of children|3.77|4.66|3.59|4.69|1.14|
|Number of children under 5|1.18|1.53|1.11|0|0.07|
|Numberof householdmembers|5.77|6.66|5.59|6.64|3.17|
|**Educational attainment**||||||
|No Education|0.06|0.17|0.04|0.07|0.05|
|Primary|0.10|0.17|0.07|0.11|0.08|
|<br>Secondary|0.54|0.47|0.55|0.54|0.50|
|<br>Higher|0.29|0.17|0.32|0.26|0.36|
|**Outcome variable**||||||
|Currently working|0.15|0.12|15.72|0.14|0.15|
|**N**<br>Source: Authors Calculations - De|52070<br>mographic a|8695<br>nd Health Survey|43375<br>(DHS): Jordan (1990|6088<br>, 1997, 2002, 2007,|4719<br>2009, 2012, 2017)|

<mark>Source: Authors Calculations - Demographic and Health Survey (DHS): Jordan (1990, 1997, 2002, 2007, 2009, 2012, 2017) Note: This table displays full and working sample means for several variables both pre and post Iftida’ divorce reform in</mark> Jordan. For the first three columns, we present full sample means pre and post reform. The remaining columns present working sample means for treatment and control groups. While the table shows means values for treatment and control groups post "treatment", the empirical analysis employs a quasi-experimental framework that takes into consideration values for pre and post reform.

# **5. Effect of Unilateral Divorce Legislation on Women’s Employment**

In this section, we present evidence on the complex relationship between legislative reforms and women’s employment in MENA countries. Tables 5, 6 and 7 present regression results over two period windows with “currently working” as dependent variable. While these results capture correlations between the outcome variable, control variables, taking the influence of fixed effects into account, they still provide valuable insight. The control variables are selected based on data availability and relevant literature on the determinants of labor force participation. The connections to the legislation reform are further discussed below.

## _5.1.The immediate effect of the reform is limited as opposed to a lagged ‘structural’ effect_

Columns 1, 2 and 3 in each table present results restricted to the first window period capturing the “immediate” effect of the reform on women’s employment. In Morocco, over the first period spanning between 1992 and 2007, an increase in women’s employment is found, but that is not statistically significant. Moreover, column 3 displays an estimate from a specification that includes age and age at first marriage time trends which allows to 21
_For labor or for divorce?_ address concerns about nonparallel trends. This specification yields positive coefficients that are higher in magnitude and statistically significant than the baseline specification. Further, we consider the impact of adding controls that pertain to two additional dimensions of social and legal changes (Klasen, 2019). The first being the effect of fertility and family structures (i.e., the transition from extended to nuclear families) changes on women’s employment outcome.

**Table 5 - Labor market outcomes of Chikak reform in Morocco**

||Chikak' ef<br>|fect window 1<br>|: 1992 to 2007<br>|Chikak eff<br>|ect window 2<br>|: 1992 to 2014<br>|
|---|---|---|---|---|---|---|
||(1)|(2)<br>Currentlywor|(3)<br>king|(4)<br>|(5)<br>Currentlywo|(6)<br>rking|
|Post x treated|0.0121|0.0118|0.0379*|0.0236**|0.0233**|-0.0245**|
||(1.36)|(1.35)|(2.33)|(2.71)|(2.70)|(-3.18)|
|Household Size||-0.00284<br>(-0.37)|<br>-0.00398<br>(-0.53)||0.0242***<br>(3.55)|0.00724<br>(1.00)|
|WBLaw Index|||-0.00560<br>(-1.85)|||0.00658***<br>(17.51)|
|Observations|8184|8184|8184|17012|17012|17012|
|Mean of outcome variable|0.214|0.214|0.214|0.259|0.259|0.259|
|WB p-value|0.002|0.002|0.738|0.57|0.742|0.002|
|N cohorts|44|44|44|54|54|54|
|Time trends|No|No|Yes|No|No|Yes|
|Controls<br>Source: Authors Calculations -|Yes<br>Demographic|Yes<br>and Health Sur|Yes<br>vey (DHS): Moroc|Yes<br>co (1992, 2003|Yes<br>) and HCP Ho|Yes<br>usehold survey|

Source: Authors Calculations - Demographic and Health Survey (DHS): Morocco (1992, 2003) and HCP Household survey data for 2007 and 2014). Notes: The dependent variable is a binary indicator for whether the interviewed woman is currently working. Columns 1 to 3 report results for a restricted period representing 15 years around the reform year between 1992 and 2007. Columns 4 to 6 report results for the full covered period between 1992 and 2014. The estimation samples are restricted to married women whose youngest child's age is around 5 years window around the custody cutoff and whom did not have children after the reform. Wild bootstrap (WB) p-value using one thousand replications. *p<0.10, **p<0.05, ***p<0.01.

# _5.2. A set of legislation that targets several areas of gender-based discriminations reduces cultural norms’ stickiness inching towards desired outcomes_

As for the second control, it captures the set of legislative advancements aimed at reducing the legal gender discrimination in these countries. For this, data from the World Bank’s Women, Business, and the Law Index (WBL) (1971 – 2021) scores based on the average of a country’s scores each year for 8 topics pertaining to mobility, workplace, pay, marriage, parenthood, entrepreneurship, assets, and pension are used. Admittedly, while the passing of laws does not guarantee desired outcomes, namely that they will be enforced, a set of legislative reforms that target several areas of gender discrimination may help create a more favorable environment as they are actionable in the short run compared to social norms and traditions, which take longer to change (Kahan, 2000; Alesina et al., 2013; Hyland et al., 2020). Moreover, there are documented cases of unintended results of a single gender 22
_For labor or for divorce?_ positive legislation reform on women’s labor outcomes (Uribe et al., 2019). For this reason, we view the overall legislative framework in conjunction with the introduction of unilateral divorce provisions. Figure B.1. in the Appendices, illustrates the relationship between legal gender discrimination, measured by the World Bank Women, Business, and the Law index (WBL), and female labor force participation rate around the (a) World and in (b) MENA region countries. While in panel (a) this relationship is upward slopping (higher WBL index score has a positive relationship with FLFP rate), this relationship resembles an inverted U curve for MENA countries (panel b). This finding is consistent with literature investigating the effect of increasing mandated maternity leave on the employment and wage penalty women pay (Pettit & Hook, 2005; Akgunduz and Plantenga, 2013; Budig, Misra, and Boeckmann, 2012). It shows that the unintended results of reducing legal gender discrimination are explained by cultural resistance, particularly from husbands who see their utility cost increase from their wives’ labor, but also by the wage costs employers incur (Espino and Salvador, 2014). This further reinforces the argument that passing legislation targeting several areas of gender-based discrimination increases the chances of changing cultural norms and inching towards desired outcomes. Thus, to include a more accurate and context specific dimension for legislative effects, a variable WBLaw_index is taken into account that takes the value of the calculated score of the World Bank’s Women, Business, and the Law Index for corresponding year observations in our samples.

The third and sixth columns of each table below report coefficient estimates from specifications that include these controls as well as the above-mentioned time trends. As for the case of Morocco, the results indicate positive and statistically significant results in the first period (1992 to 2007) but negative effects of the legislation in the second period (1992 to 2014). These results may be backed by two mechanisms. The first pertains, on one hand, to what Klasen (2019) described as the combination of strong stigma from educated women against working jobs below white collar services. The second, on the other hand, completes the first with an added layer of transfer of bargaining power to women (Stevenson and Wolfers, 2007) favoring their position within the marriage. Combining these two mechanisms, we conclude that if labor market conditions are not favorable, especially to educated women, marriage can become a more desired option (Verme et al., 2016). Considering these results, it can be stated that while the legislation reform might have had a positive effect on women’s labor outcomes initially, as was also measured by HassaniNezhad and Sjögren (2014), this effect dissipated over time, for the case of Morocco. Further 23
_For labor or for divorce?_ backing this conclusion, figure 2 in Appendix A illustrates how Morocco has had the highest increase in the WBLaw index over the full studied period, which corroborates the results we observe. The widely cited literature on collective labor supply models generally explains this type of decline in women's employment by a shift in bargaining power within the household in favor of women (Chiappori et al., 2002; Lise and Seitz 2011; Voena, 2015; Corradini and Buccione, 2023). In these models, women do not switch completely to employment if the utility cost of domestic work is as high as that of the labor market. Thus, we argue that while legislative reforms increased women’s bargaining power within the marriage, the lack of ‘women friendly’ jobs in the Moroccan labor market deterred many from labor force participation and made marriage more or equally attractive.

**Table 6 - Labor market outcomes of Khul' reform in Egypt, Arab Rep.**

||Khul' effe<br>|ct window 1 : 19<br>|92 to 2005<br>K<br>|L<br>Khul' effect<br>|window 2 : 19<br>|92 to 2014<br>|
|---|---|---|---|---|---|---|
||(1)<br>|(2)<br>Currentlywork<br> <br>|(3)<br>ing<br> <br>|(4)<br>|(5)<br>Currentlywor<br> <br>|(6)<br>king<br> <br>|
|Post x treated|0.0604**|<br>0.0603***|<br>0.0177|0.0479***|<br>0.0479***|<br>0.0271**|
||(6.82)|<br>(6.80)|(1.43)|(8.50)|<br>(8.48)|(3.04)|
|Household Size||-0.00755<br>(-0.99)|<br>-0.00566<br>(-0.78)||-0.00119<br>(-0.21)|-0.000743<br>(-0.13)|
|WB Law Index|||0.0701***<br>(6.12)|||0.00470<br>(0.61)|
|Observations|18838|<br>18838|18838|29589|29589|29589|
|Mean of outcome variable|0.23|0.23|0.23|0.22|0.22|0.22|
|WB p-value|0.002|<br>0.002|0.396|0.006|0.0140|0.006|
|N cohorts|45|45|45|58|58|58|
|Time trends|No|No|Yes|No|No|Yes|
|Controls<br>Source: Authors calculations|Yes<br>– Demograph|Yes<br>ic and Health Su|Yes<br>rvey (DHS) – Egy|Yes<br>pt 1992, 1993,|Yes<br>2005, 2008, 20|Yes<br>14.|

Source: Authors calculations – Demographic and Health Survey (DHS) – Egypt 1992, 1993, 2005, 2008, 2014. Notes: The dependent variable is a binary indicator for whether the interviewed woman is currently working. Columns 1 to 3 report results for a restricted period representing 13 years around the reform year between 1992 and 2005. Columns 4 to 6 report results for the full covered period between 1992 and 2014. The estimation samples are restricted to married women whose youngest child's age is around 5 years window around the custody cutoff and whom did not have children after the reform. The custody cutoffs are set to 10 for the first window (1992 to 2005), and to 15 for the second window to account for the custody. Wild bootstrap (WB) p-value using one thousand replications. *p<0.10, **p<0.05, ***p<0.01.

In the case of The Arab Republic of Egypt, in the first post-reform window period, between 1992 and 2005, the effect is positive for the sample of married mothers of children aged below the age-cutoff for child custody (10 years for boys and 12 for girls), but it is not statistically significant. While multiple controls for age, time trends and socio-economic position of the woman and her spouse are included, it seems that the variable corresponding to the World Bank’s WBLaw_index has the most positive effect during this first period. These results are also in line with Hassani-Nezhad and Sjögren (2014). The increase in women’s labor outcomes likely happened through a power-shift effect (described above), meaning that married women sought their employment increase thanks to gaining higher bargaining24
_For labor or for divorce?_ power (Stevenson, 2008). We further test the sensitivity of this result by restricting the same sample to divorced mothers and find a negative effect during the same period. These results show that in Egypt an overall enhancement to the legal environment favoring women’s rights during the same time that the Khul’ reform was introduced has also contributed to increasing women’s labor supply.

Our results depart from Hassani-Nezhad and Sjögren since they include a longer time window, up until 2014. The estimates for the full observed period, spanning from 1992 to 2014, show a positive effect of Khul’ reform on women’s labor outcomes in The Arab Republic of Egypt (Table 6, columns (4), (5), and (6)). These results illustrate the longer time needed for laws to alter behaviors and choices and, in this sense, the results corroborate Corradini and Buccione (2023) who have shown that the reform’s effect on labor outcomes begin to kick-in only 12 years after the legislation was passed. Compared to ours, their results are different during the first-time window mainly because they considered the variable “worked in past year” while we have taken into account “currently working”. In this sense their estimates reflect a slightly lagged effect of the reform while we measure current effect in each survey round on women’s labor outcomes. Additionally, the significantly more positive effect of the reform during the second window is due to the fact that The Arab Republic of Egypt passed the first legislative reform in 2000 with a low child age-cutoff for child custody and later increased it in 2005, after which a higher and more significant effect is recorded. We still find that the _power-shift effect_ is the main mechanism behind these results.

# _5.3.Political and cultural resistance dampens and delays the effect of legislative reforms on women’s bargaining power and labor outcomes_

Results for Jordan, on the other hand, tell a different story. For both periods, specifications that include controls for family size, legislation evolution, and time trends illustrate a positive effect of the reform on women’s labor outcomes, that are, however, modest. The main effect seems to kick-in during the second period. Like The Arab Republic of Egypt, Jordan too introduced the unilateral divorce reform over two sequences 2001 and 2010. The dispositions introduced during the latter period, beginning in 2010, arguably have granted higher bargaining power to women within the marriage and in case of its dissolution (Sonbol, 2003; Engelcke, 2018). In comparison to the cases of Morocco and Egypt, Arab Rep., the results we find for Jordan attest to the negative relationship between political resistance 25
_For labor or for divorce?_ to reforms on women’s rights and labor outcomes (Gonzales et al. 2015, Hyland et al., 2020). It also shows how a positive and sizable effect was only recorded when there was reinforcement to legislative dispositions granting women more options outside the marriage after 2010. Additionally, a sample of divorced women is also considered. Interestingly, the results hint that the anticipatory effect (Bargain, et al., 2012) might be equally as important as the power-shift effect in the case of Jordan. This said, in the long run, there seem to be structural adjustment effects that favor the power-shift mechanism leading more married mothers to the labor market.

**Table 7 - Labor market outcomes of Iftida’ reform in Jordan**

||Iftida’ effect<br>|window 1: 1<br>|997 to 2007<br>|Iftida’ eff<br>|ect window 2: 19<br>|92 to 2017<br>|
|---|---|---|---|---|---|---|
||(1)<br>C|(2)<br>urrentlywork|(3)<br>ing|(4)|(5)<br>Currentlyworkin|(6)<br> g|
|Post x treated|-0.00134|-0.00123|0.166|0.0000315|<br>0.0000466|<br>0.0195*|
||(0.1077)|(-0.11)|(0.0125)|(0.00)|(0.00)|(1.75)|
|Household Size||0.00193<br>(0.23)|-0.0033<br>(0.0087)||0.000380<br>(0.06)|<br>-0.00167<br>(-0.27)|
|WB Law Index|||0;0534**<br>(0.0174)|||0.0189**<br>(6.40)|
|Observations|10124|10124|10124|19295|19295|19295|
|Mean of outcome variable|0.135|0.135|0.135|0.137|0.137|0.137|
|WB p-value|0.368|0.336|0.314|0.372|0.398|0.0940|
|N cohorts|42|42|42|59|59|59|
|Time trends|No|No|Yes|No|No|Yes|
|Controls<br>Source: Authors Calculations|Yes<br>- Demographic|Yes<br>and Health Su|Yes<br>rvey (DHS): Jord|Yes<br>an (1990, 1997|Yes<br>, 2002, 2007, 200|Yes<br>9, 2012).|

Source: Authors Calculations - Demographic and Health Survey (DHS): Jordan (1990, 1997, 2002, 2007, 2009, 2012). Notes: The dependent variable is a binary indicator for whether the interviewed woman is currently working. Columns 1 to 3 report results for a restricted period representing 10 years around the reform year between 1997 and 2007. Columns 4 to 6 report results for the full covered period between 1992 and 2017. The estimation samples are restricted to married women whose youngest child's age is around 5 years window around the custody cutoff and whom did not have children after the reform. Wild bootstrap (WB) p-value using one thousand replications. *p<0.10, **p<0.05, ***p<0.01.

The case of Jordan is unique since Jordanian divorce laws have undergone significant changes in recent years, driven by ongoing discussions and reform efforts. El Muhtaseb, Brown, and Kayyali (2016) highlight the existence of disconnected spheres within the discourse on family law in Jordan, where different stakeholders hold varying views on divorce. However, despite these challenges, reforms have been able to address gender issues and promote women's empowerment within the existing legal framework. Supporting our results, from a qualitative point of view, Engelcke (2018) emphasizes the complex process of law-making and the obstacles faced in reforming divorce laws in Jordan. Perhaps, this complex process explains why positive results were only felt after 2010, when the age-cutoff for child custody was increased. Indeed, Jordan’s example shows how political considerations and resistance to change can result in slow progress.

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_For labor or for divorce?_ 27
_For labor or for divorce?_

# **Table 8 - Results decomposition and sensitivity checks for labor market outcomes of unilateral divorce reform by marital status**

|||**Iftida’ effe**|**ct in Jordan**|||**Khul' effect in**|**Egypt Arab.**|**Rep.**||**Chikak' eff**|**ect in Morocc**|**o**|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|(10)|(11)|(12)|
||Window 1|: 1997 to 2007|Window|2: 1992 to 2012|Window 1|: 1992 to 2005|Window 2|: 1992 to 2014|Window 1|: 1992 to 2007|Window|2: 1992 to 2014|
||Married|Divorced|Married|Divorced|Married|Divorced|Married|Divorced|Married|Divorced|Married|Divorced|
|Treatment x child age cutoff|<br>0.166|0.0477|0.0195*|0.0460|0.0177|-0.0325|0.0271**|-0.00516|0.0379*|0.0584|-0.0245**|0.0460|
||(0.0125)|(1.12)|(1.75)|(1.50)|(1.43)|(-0.61)|(3.04)|(-0.18)|(2.33)|(0.87)|(-3.18)|(1.50)|
|Household Size|-0.0033|-0.00583|-0.00167|0.0131|-0.00566|-0.0199|-0.000743|-0.0431**|-0.00398|0.00253|<br>0.00724|0.0131|
||(0.0087)|(-0.20)|(-0.27)|(0.59)|(-0.78)|(-0.79)|(-0.13)|(-2.92)|(-0.53)|(0.12)|(1.00)|(0.59)|
|World Bank Law Index|0.0534**|0.0262|0.0189**|0.00523|0.0701***|0.0228|0.00470|0.0362|-0.00560|-0.0162|0.00658***|<br>0.00523|
||(0.0174)|(0.46)|(6.40)|(0.65)|(6.12)|(0.17)|(0.61)|(1.17)|(-1.85)|(-1.27)|(17.51)|(0.65)|
|Observations|10124|290|19295|670|18838|743|29589|1333|8184|548|17012|670|
|Mean of outcome variable|0.135|0.127|0.137|0.155|0.23|0.32|0.22|0.30|0.214|0.47|0.259|0.53|
|WB p-value|0.314|0.608|0.0940|0.262|0.396|0.460|0.006|0.260|0.738|0.158|<br>0.002|0.262|
|N clusters|42|28|59|45|45|40|58|43|44|34|54|43|
|Time trends|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Controls|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|

Source: Authors calculations. Notes: The dependent variable is a binary indicator for whether the interviewed woman is currently working. The estimation samples are restricted mothers whose youngest child's age is around 5 years window around the custody cutoff and whom did not have children after the reform. Wild Bootstrap p-value for 1000 reps. *p<0.10, **p<0.05, ***p<0.01.

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_For labor or for divorce?_

# _5.4. Addressing parallel trends_

To explicitly track differential trends that underly correlations between the right to unilateral divorce and women’s labor outcomes, we use an event study. This procedure allows us to formally verify departure from parallel trends in the pre-reform periods. Consider H(t) a function mapping a given year t from the covered study period such as the event-study specification presents as follows: i = ∑ ) + ∑ ) +∝ i **(2)** −11 KK ττ=−LL ττ ii ττ=11 ττ ii ii ii YY ββ (11{HH(ii) = ττ} × p ppii ββ (11{HH(ii) = ττ} × p ppii + θθ + εε where K and L are the total number of pre-reform and post-reform periods and the year of unilateral divorce legislation is normalized to 0. Note that this equation is still similar to equation (1) in the sense that it considers a single interaction term **_post_** for post-reform measures the difference in women’s labor outcome, which ττ we consider the event-study coefficients. periods. Each coefficient term ββ ττ for the pre-reform period are different than 0 and significant suggesting that differences in We use the estimates of ββ (where ττ < 0) to test for pre-reform parallel trends. Our estimates average labor outcomes were smaller than the latter periods. F-tests of the null hypothesis that pre-reform coefficients are equal to zero result in a p-value of 0.000 for the baseline model, restricted to married women, which is strong indication of nonparallel trends in the pre-legislation reform periods. We also test the sensitivity of our results for a sample of divorced women. This is to test the hypothesis 1.b., about women increasing their labor supply in expectance of divorce. Note that for all three countries, the coefficients of the event-study for divorced women sample are close to zero with little variations between the pre and post -reform periods compared to the samples of married “treated” women. That said, the parallel trends assumption underlying a causal-inference results interpretation for the sample of divorced mothers is more conservative than the previous one (for mothers who stayed married).

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_For labor or for divorce?_ A similar dynamic is equally present for the case of The Arab Republic of Egypt, where women with lower levels of education also had a negative treatment effect over the full analyzed period, whereas those with a secondary education considerably increased their employment. It is noteworthy that for all three countries, secondary education levels have close coefficients. This result underlines how labor markets in the MENA region, in general, have limited job creation dynamic as most employments are likely concentrated in medium qualification jobs. Thus, leading us to conclude that these markets are still in a transition phase from traditional to more human capital-intensive production sectors. A transition that is costly due to sizable talent misallocations that are occurring in the labor market (Hseih et al., 2019). Finally, these results also conform with the idea that the introduction of the reforms over two stages, that happened in the cases of The Arab Republic of Egypt and Jordan, had a lagged but positif effect on women who hold higher degrees. With the introduction of dispositions that are more in favor of mothers, such as increasing the age of child custody, the derived utility of entering the labor market at the extensive margins increased for highly educated women during the second time window, likely through the same power-shift dynamic that we discussed earlier. Combined, these results show that while legislative reforms have had considerable and sizable impact on women’s position and bargaining power within the marriage, they have not fully translated to gains in labor market participation mainly due to countervailing economic barriers pertaining to decent job creation and structural transformations that have yet to occur in these countries.

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_For labor or for divorce?_

# **6. Concluding remarks and policy relevant discussion**

The impact of unilateral divorce legislation on women’s employment outcomes has drawn considerable attention in recent years, especially since a robust interaction between legislation that reduces gender-based discrimination and female labor force participation is observed around the world. This study offers new evidence on the effect of the introduction of unilateral divorce laws on women’s labor outcomes in three MENA region countries; Morocco, The Arab Republic of Egypt, and Jordan.

By exploiting differences in the age-cutoffs for child custody, set by legislators in each country, the results highlighted that mothers who stayed married benefited the most from the introduction of the right to unilateral divorce, suggesting that a _power-shift_ mechanism occurred within the household. There is little to no discernible impact of the _anticipatory effect_ on women’s employment. Still, the initial increase in women’s labor outcomes, caused by the _power-shift effect_ , can be offset by a slower dynamic in the labor market where mothers, arguably, still face higher costs. Such is the case of Morocco, where increasing women’s bargaining power within the marriage does not ensure their full transition to the labor market. Moreover, if women face higher costs in the labor market, such as search costs or lack of descent working conditions, then marriage continues to be a better option, insofar as divorce also remains a viable outside option that balances power dynamics within the marriage.

These findings complement previous studies by Hassani-Nezhad, and Sjögren (2014) and Corradini and Buccione (2023) and offer two key policy implications. First, they support that the enhancement of legislation that targets gender-based discrimination in MENA countries reflects a shifting paradigm regarding gender equality. While challenges and limitations persist, these reforms symbolize a significant stride towards establishing more equitable and inclusive laws that empower women and advance gender equality in the region. Second, they highlight the importance of understanding the interactions between gender-based discrimination and labor market mismatch. By enacting progressive legislation that ensures equal rights and opportunities within family, countries can enhance women's empowerment, promote their labor force participation, and foster inclusive economic growth. But the effect of existing legislation may still be limited. This analysis revealed that the transition to the labor market may still be costlier to women, especially mothers of young children (Anukriti et al., 2023; Halim et al, 2023). As such 34
_For labor or for divorce?_ closing the childcare policy gap should be at the forefront of policy makers agendas. Despite notable progress in this regard, policies extending coverage of childcare services, including early childhood care, and paid parental leave, are direly needed in the region. In fact, the limited access to childcare or lack thereof explains to a considerable extent the stagnant and even declining gender labor participation rate.

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