Female Employment in Ecuador After the 2015 Labor Reform: A Synthetic Control Analysis

Background: Ecuador enacted the 2015 Organic Law for Labor Justice and Recognition of Domestic Work to strengthen employment stability and worker protection. Among its provisions, the reform established safeguards against pregnancy- and maternity-related dismissal and extended pension protection to people performing unpaid household work. This study examines whether the female employment-to-population ratio followed a different trajectory after the reform. Methods: The Synthetic Control Method was applied to annual country-level data from 1991 to 2023. Ecuador was compared with a weighted combination of eight Latin American and Caribbean countries that approximated its pre-reform employment trajectory. Placebo-in-time and placebo-in-space tests, post-treatment-to-pre-treatment mean squared prediction error (MSPE) ratios, an expanded-donor-pool analysis, and leave-one-out analyses were used to assess the stability of the comparison. Results: Female employment in Ecuador fell below the synthetic counterfactual after 2015, with a gap of approximately −3.0 percentage points in 2015 and a most negative annual gap of approximately −10.9 percentage points. Ecuador had the largest post/pre MSPE ratio, approximately 26, across Ecuador and the eight donor-placebo assignments. The corresponding placebo-based rank p-value was 1/9 = 0.111, the smallest attainable value with eight donor placebos; it therefore did not reach the conventional 5% or 10% significance levels. Conclusions: The evidence shows a sustained post-2015 divergence beginning in the reform year, but it does not establish that the reform caused the decline. The oil price collapse and the 2015–2016 economic slowdown coincided with the onset of the divergence, while the COVID-19 pandemic may have affected the gap from 2020 onward. These overlapping shocks limit causal attribution. Hiring responses, informality, and unpaid care burdens are therefore discussed as plausible mechanisms rather than empirically tested explanations.