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Hadi Salehi Esfahani () and Parastoo Shajari
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Hadi Salehi Esfahani: University of Illinois, Urbana, IL 61801, USA
Parastoo Shajari: Monetary and Banking Research Institute, Tehran, Iran

Middle East Development Journal (MEDJ), 2012, vol. 04, issue 02, 1-40

Abstract: The gender gap in labor force participation (LFP) in Iran is much larger than most other countries, but it has been declining. Also, the composition of women's employment has been shifting towards professional and entrepreneurial positions, especially in the private sector. Analyzing the forces behind these patterns is important from a policy perspective and for predicting the future trends in the Iranian labor market. Understanding the case of Iran has also implications for other economies, especially those in the Middle East and North Africa, which have similar labor market conditions. Using a large sample derived from Iran's 2006 census and employing IV Probit and multinomial Logit models, we examine the role of education and other individual and family characteristics in LFP and employment of Iranian men and women aged 25–54. We find that about 60% of the rise in female LFP rate between 1986 and 2006 can be attributed to the decline in fertility. The expansion of education, on the other hand, accounts for about 10% of the rise. The limited role of education is partly due to the limited range of jobs that are available for educated women, hence intensifying competition among them and reducing the returns to their education. Alleviating this jobs constraint may allow the role of education to rise two to three times. In addition, part of the fertility effect can be attributed to female education, which has played an important role in lowering the number of children ever born. Since fertility is unlikely to decline further, female education could become the main driving force in the continued rise of women's LFP. We also find that women who join the labor market as a result of tertiary education, especially at the graduate level, have a much higher chance of joining the private sector, especially as employers and self-employed, than the average person in their cohort. Contrary to the common perception, the association between education and public employment is stronger for men than for women. These findings imply that tertiary education, especially at the graduate level, may help address the important policy challenges that Iran and other MENA countries in alleviating unemployment, diversifying the economy, and empowering women.

Keywords: Gender; education; fertility; marriage; labor force participation; employment (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1142/S1793812012500083

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