Does microcredit reduce gender gap in employment? An application of decomposition analysis to Egypt

Does microcredit reduce gender gap in employment? An application of decomposition analysis to Egypt

Although gender equality has received a great deal of attention from policymakers as well as researchers, there is still as a large gap between men and women in labor market, especially in Arab societies.
 
In this paper, the authors examine the impact of microcredit on labor supply of men and women and subsequently investigate whether microcredit can reduce employment gap between men and women in Egypt. Overall, they show no significant effects of microcredit on labor supply of men.

Yet, the paper finds a strong effect on employment of women aged 22 to 65. Borrowing from a microcredit source increases the probability of working for women by 0.071. Since the proportion of working of women was around 2.1%, it implies microcredit can increase the proportion of working of women by around 30 percent. Using decomposition analysis, the authors find that micro-credit can reduce the employment gap between men and women by 0.43 percentage points. If 20 percent of women obtain microcredit, the employment gap between men and women would be decreased by 4.3 percentage points.
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