Female Labour Force Participation, Industrial Upgrading and Service Transition: A Dynamic Theoretical Model

In this paper, I propose a theoretical model to explain the variation in female labour force participation (FLFP) across post-socialist Eastern Europe. Embedded in insights from economics and comparative political economy literature, the proposed theoretical model moves beyond linear causal relationships between variables of interest and examines how different components of post-socialist economic restructuring in Eastern Europe affected one another and translated into specific FLFP outcomes. The model specifies the following three components: industrial upgrading, educational expansion and growth of knowledge intensive services and theorises their relationship to each other and to FLFP as the dependent variable. The model suggests that Eastern European countries that embarked on the trajectory of economic development led by FDI intensive industrial upgrading created a vicious cycle for FLFP. This took place because of the direct effect of industrial upgrading on defeminisation of manufacturing, but also because this type of economic restructuring shaped these countries’ education policy and impeded the development of knowledge intensive services. Such a trajectory reinforced the negative effect of industrial upgrading on female labour. The virtuous cycle of FLFP, on the other hand, occurred in those countries that, instead of pursuing re-industrialisation, turned to reforming their educational sector with the aim of transforming themselves into high productivity service economies. Because such transformation required an active developmental state, knowledge intensive public sector employment was created in order to support this transition. This development path created a positive feedback loop for FLFP.