Gendered impacts of oil price shocks: analyzing women's labor force participation in petrostates

Abstract

Oil wealth has been shown to negatively affect women's participation in the labor force. But does declining revenue from fossil fuels, due to the global energy transition, lead to higher female labor force participation (FLFP) and greater gender equality in petrostates? Such hypothetical/future-oriented questions are difficult to answer. This study gets around the challenge by conducting a mixed-method analysis to assess the relationship between oil price shocks and FLFP, emphasizing socio-economic development and policy implications. Empirical findings indicate there is a causal link between oil price shocks and FLFP in petrostates, with falling oil prices associated with increases in participation and rising prices linked to declines. This relationship appears to be driven by female employment opportunities, government transfers and subsidies, foreign worker flows, and governance quality. Qualitative evidence from Saudi Arabia demonstrates how policy reforms following the 2014 oil price bust can increase FLFP. The results suggest that petrostates are likely to encourage greater women's labor force participation to maintain their prosperity amid diminishing oil revenues driven by the energy transition and global decarbonization efforts in the coming decades.