Another section is gender wage differential which is the difference between the wages earned by men and those earned by women. In developing countries like Ghana, the agricultural sector is a dominant source of employment. Women in this sector in these economies are faced with low earnings and low productivity since this sector is attributed to insecure employment situations. Also, as a result of feminization of the labour force, most newly created jobs are being occupied by women. A significant number of women in member states of the European Union participates in typical labour relations such as temporary employment, part-time employment and unusual schedule employment involving inferior and hazardous labour settings (Meulders et al, 1997). Plantega (1997) also reports that the United Kingdom and Denmark have the highest women labour force participation level as a degree of segregation by gender, other countries like Greece and Spain have low labour force participation. Nations should consider economic involvement of women which has potential significant for economic development.
Little contributions have been made as far as economics, gender and household variables are related, even though some sociologists have highlighted on some aspects of this notion. The fundamental reason for intra-household and gender disparity is related to income of male and females. Studies elaborates that women would be realized to have a large mouth piece and dominance in household decision making if income levels appreciate. Dwyer and Brunce (1988) and Blumberg (1991) asserted that women have obligations towards their household, most –significantly to their children.
Also an increase in female earnings can reduce current poverty and stimulate short-term growth through higher consumption expenditures, and another path it could reduce future poverty and stimulate long-term growth through higher savings. Also to some extent that increased female earnings leads to higher bargaining power for the woman in the household, increased earnings has an indirect effect of promoting increased child well-being. Children’s health status and welfare is another channel through which increased gender equality could be related to poverty reduction and growth. A child’s welfare, health and educational status would be improved when women have control over household resources allocation and an increase in their education and that would lead to the increase in the child’s productivity and cognitive ability (Hoddinott et al. 2005; Behrman and Alderman, 2006). Therefore, when women’s level of household decision making increases, it leads to the capability of acquiring earnings and in effect expands the tendency for poverty reduction and growth.
Furthermore, Goldin (1995) and Tam (2011) employed a U theory to explain the link between women labour participation and economic development. Income effect is defined on the declining portion of the U shape, where household produced goods are not profitable to sell relative to factory produced goods. In the same way, technology advancement in agriculture sector may reduce their demand as wage laborers. This could be as a result of social, cultural and religious barriers which could be an inhibition. The rising part of U explains substitution effect. Women obtains broader access to higher level of education and new technologies when income effect remains constant and they are offered improve positions in the service sector such as white-collar jobs as high paid workers. When substitution effect dominates income effect, it induces women to join the labour force. The initial stage of economic development is indicated by income effect dominating substitution effect. The relationship between women’s educational attainment and advances of economic development is hypothesized about U (Goldin, 1995). The advances in male education relative women is as result of incomes effect dominating substitution effect at the prior stages of economic development. But then when there is access to higher education attainment for women that ultimately makes substitution effect greater than income effect, and that creates an upward bending labour supply function, and this U theory mostly applied in developed countries. Women labour force participation and economic growth is also influenced by urbanization and unemployment (Tinsel, 2001). The argument progressed to a point that if added worker effect dominates discouraged worker effect, the effect of unemployment on labour participation rate may be positive and when male unemployment is high, women come in to take up the responsibility to earn income for the household and that is added worker effect. The influence of educational level on labour force participation rate is inverse such that discouraged worker effect dominates added worker effect. Women are impeded to join labour market since discouraged worker effect is economic and psychological costs for searching job is high.