January 2021

IZA DP No. 14055: Women's Employment and Natural Shocks

Eugenia Canessa, Gianna Claudia Giannelli

We employ georeferenced data and longitudinal household panel survey data to investigate the impact of the dramatic flooding that hit Bangladesh from August-September 2014 on women's employment and empowerment. Development economics models suggest an increase in household members' labour supply as a shock-coping strategy. Our difference-in-differences estimates confirm this assumption: women's employment probability increases by approximately 13 percentage points. Correcting for selection bias due to the initial employment status of women, we also find significant increases in the probability of non-employed women entering employment, in the average monthly income of employed women and in the probability of women engaging in autonomous wage-earning activities. Finally, we show that the greater earning capacity of employed women—instrumented by the intensity of flooding in the villages where women live—contributes to raising their bargaining power within the household as measured by the Women's Empowerment in Agriculture Index and by economic decision-making indicators.