For countries with high Islamic prevalence, giant oil and gas discoveries depress female workforce participation not because of the discoveries themselves but because of restrictions on women's mobility in many Muslim-majority countries, according to a new study that contradicts previous hypotheses.
The study, published May 12 in the Journal of Economic Behavior & Organization, found that female workforce participation declined by .37 percentage points when oil and gas discoveries were made in countries that had a 100% Muslim share of the population in 1900, during the pre-oil era, and currently have restrictions on whether women can travel outside the home the same way that men can. Over the course of a decade, the cumulative effect is a 1.7 percentage point decrease in female workforce participation in these countries when unexpected oil discoveries occur.
Female employment levels, and the gap between men and women in labor participation, vary across the world. While the total global gap in workforce participation rate between men and women is 26 percentage points — 49% participation for women and 75% participation for men — some areas have very low female workforce participation rates, while others have relatively smaller gaps.
For example, 55.7% of women participate in the workforce in the U.S compared with 68.3% of men, but in Saudi Arabia, only 22.3% of women participate in the labor force compared with 79.5% of men.
The Middle East and North Africa region of the world is particularly marked by lower levels of female workforce participation, but up until this point, there's been a disagreement about why this is so — whether natural-resource booms in the oil-rich area or deep religious and cultural attitudes about the role of women in society drive gender workforce inequality, according to Knut-Eric Joslin and Frode Martin Nordvik, the co-authors of the paper and associate professors at Kristiania University College.
Prior research has postulated that giant oil and gas discoveries in the region are the culprit, stating that booming oil sectors demand more male than female labor, and that women employed in lagging tradable sectors lose their jobs with no other sectors to absorb them. A giant oil field is one that is estimated to have 500 million barrels or more of recoverable oil.
However, a fresh look at the issue revealed that the booms themselves aren't the cause of lower levels of female workforce participation.
Joslin and Nordvik analyzed the timing and the size of 124 giant oil and gas discoveries across 126 countries from 1990-2018, and they linked these booms with the share of the country's population adhering to Islam in 1900. Giant, supergiant and megagiant oil-discovery data was retrieved from the American Association of Petroleum Geologists. The researchers paired this with the population share of Muslims across the 126 countries in 1900 using a measure developed by prior research, which provides detail about historical aspects of world religions and gauges the adherence to Islam across countries in the pre-oil era; they additionally used information from the Religious Characteristics of States Dataset, also produced by prior research. Workforce participation data was collected from the International Labour Organization's ILOSTAT database.
The researchers found that oil booms have negative effects on female workforce participation in countries with high Islamic prevalence and restrictions on women's mobility as dictated by Islamic family law in those countries. In contrast, countries with low to moderate Islamic prevalence, or countries where these mobility restrictions are relaxed, saw neutral to positive impacts from oil booms. In non-Muslim countries, giant resource discoveries appear to have no impact on female workforce participation.
Limits on women's mobility present in Muslim-majority countries today include royal decrees from the sultan of Oman, disallowing women to travel outside the home as they wish, to choose where to live, to apply for passports, or to travel outside of the country, according to the researchers. Moreover, Pakistan requires a husband's approval for a married woman to apply for a passport, and, until 2018, women were not allowed to drive motor vehicles in Saudi Arabia.
"It was surprising how much and how widespread this kind of family law is," Nordvik said. "So, if a woman cannot travel outside the home as she wishes, or if she cannot have the same sort of desire to live, then it's a huge handicap."
When a huge discovery is made, he said, "there's a lot of activity, people are moving around from one sector to the other."
"If only men are allowed to decide where to move, then women are not able to decide for themselves," Nordvik said. "The women have a huge handicap in taking advantage of these booms that arise."
Nordvik said that in countries like Uzbekistan and Kyrgyzstan, even though they have a high prevalence of Islam, the relaxed mobility rules allow women to move more freely, and so these countries see higher female workforce participation rates than other Muslim-majority countries.
"So it's not just resources themselves that have these negative effects," Joslin said. "And so, discriminating between the effects of resources and the effects of these cultural norms is addressing a concern that people have had about the effect of resources on an economy."
Joslin and Nordvik said more research needs to be done to further investigate how limits on women's mobility impact workforce participation. Nordvik said his next "dream project" would be to take a closer look at the findings from this paper to discover the micro-level mechanisms that drive this inequality.
"On the micro-level," he said, "if you have a huge discovery, is it sort of households move around a lot so that the husband moves to where the job is and the wife just has to sort of tag along, or what is the exact mechanism that creates this pattern?"
The study, "Does religion curtail women during booms? Evidence from resource discoveries," published May 12 in the Journal of Economic Behavior & Organization, was authored by Knut-Eric Joslin and Frode Martin Nordvik, Kristiania University College.