The Impact of Financial Crises on Female Labour


This article focuses on the impact of financial crises on female labour participation and unemployment. After a review of the literature, we present new econometric results on the impact of past financial crises. We employ the random effects panel estimation method on a large set of countries for the period 1980–2005. The regressions include many control variables, and obtain also results on the severity of financial crises for economies at different levels of development and the persistence of the impact on female unemployment. For robustness checks and sensitivity analysis, alternative definitions of crises have been used. Although we are aware of the peculiarities of the last crisis – especially its global nature – we think that our results on past financial crises, together with key evidences on the last crisis, can favour a better definition of appropriate policy actions.


Cet article s’intéresse à l’impact des crises financières sur la participation des femmes sur le marché du travail et sur le taux de chômage féminin. Après avoir passé en revue la littérature sur le sujet, nous présentons de nouveaux résultats économétriques sur l’impact des crises financières passées. Nous utilisons la méthode d’estimation des effets aléatoires sur données de panel concernant un ensemble de pays sur la période entre 1980 et 2005. Nous intégrons dans le modèle de régression de nombreuses variables de contrôle, et obtenons également des résultats concernant la sévérité de l’impact des crises financières sur les économies, aux différents niveaux de développement, et sur la persistance de leurs effets sur le chômage féminin. Pour tester la robustesse des résultats et analyser leur sensibilité nous utilisons d’autres définitions possibles du terme ‘crise’. Bien que nous ayons conscience des particularités de la dernière crise, et notamment de sa nature globale, nous estimons que nos résultats relatifs aux crises financières passées, associés à des éléments clés concernant la crise récente, peuvent aider à élaborer des mesures politiques appropriées.

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  1. 1.

    As for the link between subprime mortgage defaults and global financial crisis, see, for example, Brunnermejer (2009).

  2. 2.

    There are some other examples, for example, Verick (2009), that in order to investigate the impact of the recent crisis on the labour market (especially on young men and women) begins by considering the effects on unemployment of the past ‘Big 5 Crises’ (Spain 1977, Norway 1987, Finland 1991, Sweden 1991 and Japan 1992).

  3. 3.

    See also Dejardin and Owens (2009).

  4. 4.

    Nevertheless, it may happen in some instances that women's employment is counter-cyclical: firms may attempt to reduce costs, by employing cheap forms of labour, such as non-regular or atypical workers, workers (young people or women) with low wages and so on.

  5. 5.

    ILO (2010) – that defines vulnerable employment as the sum of own-account workers and contributing family workers, people with informal work arrangements, often lacking adequate social security and recourse to effective social dialogue mechanisms – maintains that this type of employment has increased after the recent crisis.

  6. 6.

    We briefly recall the dates and countries of origin of the eight ‘international financial crises’: (i) in 1873, German and Austrian stock markets collapsed; (ii) in 1890, a debt crisis involved Latin America; (iii) in 1907, a fall in copper prices caused financial panic in the United States; (iv) in 1929, with a stock market crash in United States started the well-known ‘Great Depression’; (v) in 1981–1982, a Latin American debt crisis began producing a decade-long debt crisis; (vi) in 1991–1992, real estate and equity price bubbles burst in Scandinavia and Japan, whereas in Europe the ERM entered into crisis; (vii) in 1997–1998, the Asian and Russian crises; (viii) finally, in 2007–2008 the worst financial crisis (after 1929) started in United States. For more details, see IMF (2009, p. 128).

  7. 7.

    It should be noted that recent literature on the real impact of financial crises emphasizes the medium-term effects (for example, Boyd et al, 2005; Cerra and Saxena, 2008; Furceri and Mourougane, 2009; IMF, 2009, Chapter 4).

  8. 8.

    According to the International Labor Organization, the organization from which the data were extracted, a woman is economically active if she is employed or actively seeking work. The female labour force participation rate is defined as the number of economically active women belonging to a working-age population divided by the total female population in that age group.

  9. 9.

    Similarly, the currency crisis and debt crisis variables take a value of one if there is a crisis and zero otherwise.

  10. 10.

    Capital stock per worker data are taken from United Nation Industrial Development Organization database. Data on our other control variables are taken from WDI historical database.

  11. 11.

    To adjust for extreme movements, we modify the inflation rate (P) as (P/100)/(1+(P/100)).

  12. 12.

    VIF for crises is 1.04, for inflation 1.10, for capital stock per worker 1.13, for foreign direct investment 1.17 and 1.21 for openness. Mean value for VIF is 1.13. The low value of VIF suggests that multi-collinearity is not a problem in our estimations.

  13. 13.

    A 5 per cent level of significance is used for choosing between fixed effects and random effects. In Model 2, low P-value suggests the use of fixed effects model, and thus we applied fixed effects only for Model 2 in Table 1.

  14. 14.

    To identify the four income groups, income categorization is made in accordance with the WDI ranking.

  15. 15.

    In general, the results in terms of participation rates seem more robust than the estimations referred to the URs. A possible explanation is that, following financial crisis, many women decide to retire from the labour market, at least from formal activities: this is the well-known ‘discouraged worker’ effect.

  16. 16.

    A sensitivity analysis applied to FURs shows that currency crisis is probably the type of crisis that affects more significantly such URs (results available upon request).

  17. 17.

    Estimation results are not presented here but are available on request.

  18. 18.

    IMF (2009) partly explains the above-mentioned heterogeneity by considering the multifaceted dimensions of labour market flexibility, such as employment protection legislation, the types of wage-bargaining arrangements, the level and duration of unemployment benefits, the diffusion of temporary contracts.

  19. 19.

    On the other hand, working poverty dramatically increased in many regions, especially South East Asia and the Pacific, South Asia, North Africa and Sub Sahara Africa.

  20. 20.

    For example, in case of Australia (see Richardson, 2009) the recession has not affected women's unemployment as seriously as it has affected that of men; rather, women faced chronic difficulties in the labour market (see section ‘Female work, women segregation and gender gap’), which are exacerbated by the recession.

  21. 21.

    Eurostat, 30 April 2010 and 30 September 2011.

  22. 22.

    The absolute decrease in female UR in Germany and the slight increases in Austria, Belgium, Finland, the Netherlands and the United Kingdom should be noted. In particular, in the case of Germany, in August 2011 both total and female URs presented lower values with respect to September 2008.

  23. 23.

    Moreover, structural policies will also be needed in countries that were suffering from scant growth (even before the crisis) or unbalanced development.


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Earlier versions of this article have been presented at the MET Research Seminar on Implications of the Global Financial Crisis for Emerging Economies (UCL, London, 8 January 2010) and at the EACES bi-annual Conference on Comparing Responses to Global Instability (University of Tartu, Estonia, 26–28 August 2010). We are grateful for the several comments received in the above meetings and we especially thank two anonymous referees for useful suggestions permitting to improve the article. The usual disclaimer applies.

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Correspondence to Marcello Signorelli.



Figure A1

Figure A1

Female unemployment rate percentage change over the same period of previous year.

Table A1, Table A2, Table A3, Table A4, Table A5, Table A6, Table A7

Table A1 Sample countries in empirical estimation by income group
Table A2 Data description and sources
Table A3 Mean and standard deviation
Table A4 Correlation matrix between dependent and explanatory variables
Table A5 Impact of crisis on female unemployment rate in high-income OECD countries
Table A6 Impact of crisis on female unemployment rate in non-OECD countries
Table A7 Unemployment rates (total and female) September 2008 versus March 2010 and August 2011

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Signorelli, M., Choudhry, M. & Marelli, E. The Impact of Financial Crises on Female Labour. Eur J Dev Res 24, 413–433 (2012).

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  • financial crises
  • labour market impact
  • female participation
  • female unemployment
  • panel estimation