Rise of Services and Female Employment: Strength of the Relationship

Rise of Services and Female Employment: Strength of the Relationship

17/02

February 2017

Recent literature focuses on the relationship between rise of services and female employment, arguing that the former is the driving force behind the rise in the latter in developed economies. In this paper we challenge this link by focusing on a developing country. Turkey stands out among other OECD countries with its unusually low female employment rate accompanied with a quite low service employment share. We investigate whether the female employment rate in Turkey will ascend to the current ranks of developed countries when it catches up with the current service shares of employment of those countries. We address this question in a multi sector structural transformation model with goods, service and home production. Using the calibrated model, we simulate the structural transformation path of the economic activity in Turkey away from other sectors into services. Our results suggest that rise of services by itself is not sufficient to generate the increase in female employment that is comparable to the experiences of developed countries. High comparative advantage of females in service sector is needed to achieve the desired increase, the channel that lacks in the Turkish case. More research is needed to understand the roots of female comparative advantage in service sector and its links to structural transformation.

Female labor supply, Structural transformation, Home production, Sectoral labor allocation