Good from Far, Far from Good: The impacts of the 2016 female labor reform in Iran

Abstract

We investigate the impacts of the 2016 female labor reform in Iran – a country with one of the world’s poorest gender equity records – mandating employers to reduce working hours without pay cuts for eligible female workers to “ensure the social security of vulnerable women.” Using nationally representative quarterly household income and expenditure survey data, our analysis shows that the reform led to a modest reduction in the working hours of eligible women but fell short of its stated objectives. Moreover, the reform resulted in declines in employment, particularly in the formal sector, among both targeted mothers and non-targeted women of childbearing age. Targeted households also experienced reductions in expenditures, especially in education spending. These findings highlight that gender-specific policies failing to incentivize employers can exacerbate labor market distortions and household welfare disparities.