Female Labour Force Participation in the MENA Region: The Role of Identity

We investigate why female labour market participation is low in the MENA region. Utilising Akerlof and Kranton's (2000) "identity economics" approach, we show in a simple game-theoretic framework that women socialised in a traditional family environment violate their identities by taking a job. In the empirical analysis, we study the respective impact of two determinants of identity in the MENA region, Islam and cultural tradition. Employing two waves of the World Values Survey, we find significant evidence that identity affects female labour market participation. Moreover, our estimates suggest that in the MENA region, Muslim women do not participate in the labour market less than non-Muslim women, whereas those with strong traditional identities have a 5 percentage point lower probability of entering the labour market.