Report on Economic Development, Gender Norms, and Female Labour Force Participation in Vietnam

Introduction: Economic Development and Female Labour Force Participation (FLFP)

Existing literature identifies a U-shaped relationship between economic development and female labour force participation (FLFP), where initial development stages see a decline in FLFP due to women exiting subsistence agriculture, influenced by the separation of market work and home production and societal stigma. As economies develop, increased education and demand for service jobs typically raise women’s participation in the labour market.

However, this U-shaped pattern is not universal and varies significantly among developing countries, indicating the influence of cultural norms and social expectations on women’s employment.

Case Study: Vietnam’s Female Labour Force Participation

Vietnam presents a unique case with a female-to-male labour force participation ratio exceeding 90%, outperforming many advanced economies. Despite rapid economic growth and trade liberalization since the 2000s, the gender employment gap has widened due to a decline in female labour force participation.

Impact of Export Shocks on Female Employment in Vietnam

Following the US-Vietnam Bilateral Trade Agreement (2002) and Vietnam’s WTO accession (2007), export-led growth and foreign direct investment (FDI) surged. Using a shift-share methodology and data from the Vietnam Household Living Standards Surveys (2002–2018), the study analyzed the causal effects of export growth on labour market outcomes.

1. Export shocks facilitated structural transformation by shifting workers from agriculture to formal employment.
2. Women capitalized on new opportunities in manufacturing and services, especially in FDI-driven, labour-intensive sectors like textiles and electronics.
3. Despite these opportunities, female labour force participation decreased significantly in provinces with high export exposure, while male employment remained stable.
4. Wage gains were similar for both genders, indicating that some women exited the labour force despite available jobs.

Income Effect and Traditional Gender Norms

The decline in female labour force participation amid expanding economic opportunities is attributed to the interaction between rising household incomes and traditional male-breadwinner norms:

• Higher household income reduces the financial necessity for dual earners.
• Married women in wealthier households, particularly where husbands earn higher incomes, are more likely to leave the workforce.
• This income effect encourages home production over market work, outweighing substitution effects from export shocks.

Regional Differences: North versus South Vietnam

Vietnam’s historical division into socialist North and capitalist South has resulted in persistent differences in gender role attitudes and female labour force participation:

• North Vietnam, with a socialist legacy promoting gender equality, maintains female labour force participation near 90%, comparable to men.
• South Vietnam, with traditional gender norms, shows female participation around 80%, lower than the North.
• World Values Survey data confirm stronger gender-egalitarian views in the North.
• Women in the South reduce labour supply more substantially following export expansion, across all wealth levels.
• North-born women living in the South retain labour supply patterns similar to those in the North, indicating lasting influence of early-life exposure to egalitarian norms.

Conclusion and Policy Implications

Vietnam’s economic growth has not translated into increased female labour force participation due to the reinforcing effect of traditional gender norms amid rising household incomes. The North-South divide underscores the lasting impact of politico-economic regimes on gender attitudes and labour market outcomes.

For sustainable development and achieving the Sustainable Development Goals (SDGs), particularly SDG 5 (Gender Equality) and SDG 8 (Decent Work and Economic Growth), the findings suggest:

1. Structural economic transformation alone is insufficient to boost female labour participation.
2. Complementary policies targeting gender norms, such as public awareness campaigns and education, are essential.
3. Early exposure to gender-egalitarian values can have lasting positive effects on women’s economic engagement.
4. Addressing cultural and social barriers is critical to reducing gender disparities in the labour market.

References

• Afridi, F., Dinkelman, T., & Mahajan, K. (2018). Why Are Fewer Married Women Joining the Work Force in Rural India? A Decomposition Analysis over Two Decades. Journal of Population Economics, 31, 783-818.
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• Dinkelman, T., & Ngai, L. R. (2022). Time Use and Gender in Africa in Times of Structural Transformation. Journal of Economic Perspectives, 36(1), 57-80.
• Goldin, C. (1995). The U-Shaped Female Labor Force Function in Economic Development and Economic History. In Investment in Women’s Human Capital and Economic Development. University of Chicago Press.
• Huynh, Q., & Ku, H. (2025). Gender Norms and Female Labor Supply: Evidence from Export Shocks in Vietnam. CEPR Discussion Paper 20251.
• Jayachandran, S. (2015). The Roots of Gender Inequality in Developing Countries. Annual Review of Economics, 7(1), 63–88.
• McCaig, B., & Pavcnik, N. (2015). Informal Employment in a Growing and Globalizing Low-Income Country. American Economic Review, 105(5), 545-50.
• McCaig, B., & Pavcnik, N. (2018). Export Markets and Labor Allocation in a Low-Income Country. American Economic Review, 108(7), 1899-1941.
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• Olivetti, C. (2014). The Female Labor Force and Long-Run Development: The American Experience in Comparative Perspective. In Human Capital in History: The American Record. University of Chicago Press.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 5: Gender Equality
   • The article focuses on female labour force participation (FLFP), gender role attitudes, and gender disparities in employment, directly relating to achieving gender equality and empowering all women and girls.
2. SDG 8: Decent Work and Economic Growth
   • The discussion on economic growth, structural transformation, export shocks, and employment opportunities relates to promoting sustained, inclusive economic growth and productive employment for all.
3. SDG 10: Reduced Inequalities
   • The article highlights disparities in labour force participation between genders and regions (North vs. South Vietnam), addressing inequality issues within and among countries.
4. SDG 4: Quality Education
   • Rising education levels are mentioned as a factor influencing women’s labour market participation, linking to inclusive and equitable quality education.

2. Specific Targets Under Those SDGs Identified

1. SDG 5: Gender Equality
   • Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life.
   • Target 5.4: Recognize and value unpaid care and domestic work through the provision of public services, infrastructure, social protection policies, and the promotion of shared responsibility within the household and family.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.5: Achieve full and productive employment and decent work for all women and men, including young people and persons with disabilities, and equal pay for work of equal value.
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation.
3. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion, or economic or other status.
4. SDG 4: Quality Education
   • Target 4.4: Increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs, and entrepreneurship.

3. Indicators Mentioned or Implied to Measure Progress

1. Female Labour Force Participation Rate
   • Measured as the ratio of female to male labour force participation rates, as shown in Figure 1 and discussed throughout the article.
   • Used to track gender parity in employment and changes over time in different regions of Vietnam.
2. Employment by Sector
   • Proportion of women employed in manufacturing and service sectors, especially in labor-intensive industries influenced by foreign direct investment.
3. Wage Gains
   • Comparison of wage increases between men and women to assess equality in economic benefits from export shocks.
4. Household Income Levels
   • Used to analyze the income effect on female labour supply, particularly among married women in wealthier households.
5. Gender Role Attitudes
   • Survey data from the World Values Survey measuring gender-egalitarian views versus male-breadwinner norms, influencing labour market participation.
6. Regional Labour Force Participation Rates
   • Differences between North and South Vietnam’s female labour participation rates as an indicator of the impact of socio-political history on gender norms.

4. Table: SDGs, Targets and Indicators

Source: cepr.org