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Can economic development boost the active female labor force?

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Abstract

This study explores whether the female labor force participation rate (FLFPR) can promote economic development in Asian countries. We apply the method of bootstrap panel Granger causality in order to consider the cross-sectional dependency and heterogeneity to detect specific patterns of the interactive relationships between the two variables. The estimation results point out that the interaction patterns vary across countries, which is consistent with the U-shaped hypothesis. Specifically, when the economy develops, FLFPR declines in Vietnam and India, whereas economic development promotes the FLFPR in Korea, Malaysia, Singapore and Thailand. More specifically, when GDP per capita lies at a relatively low level, the income effect dominates the substitution effect, resulting into the FLFPR changing in opposite direction. Nevertheless, the substitution effect holds the dominant position when the GDP per capita reaches a high level. The increase of FLFPR is accompanied by economic development due to availability of more jobs and increasing level of education. Therefore, policy makers should formulate plans in order to benefit from the potential of the female labor force by stimulating economic development.

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Notes

  1. According to the research by Kónya (2006), identifying the optimal lag length(s) benefits for robustness of results. For a relatively large panel, different equation and variable in lag structure would lead to a significant increase in computational burden. To overcome this problem, we allow maximal lags to vary across variables and estimate the system for each possible pair of lags, respectively. Specifically, we assume from 1 lag to 4 lags and then select the optimal lag length(s) by minimizing Schwarz Bayesian Criterion.

  2. According to the classification criterion of Word Bank, Japan, Korea and Singapore belong to the high income, China, Malaysia and Thailand is upper- middle level, and low income contains Indonesia, Philippines, Vietnam and India.

  3. In the presence of cross-sectional dependency, SUR approach is more efficient than country-by-country ordinary least-squares (OLS) method (Zellner 1962). Therefore, the causality results obtained from SUR estimator developed by Zellner (1962) will be more reliable than those obtained from the country-specific OLS estimations (Chi-Wei et al. 2013).

  4. The added worker effect is recognized as an increase in the labor supply of married women if their husbands lost job and become unemployed. The assumption of this theory is that married women are secondary workers with a less permanent attachment to the labor market than their partners (Stephens, 2002).

  5. Socialist countries are prone to encourage female to enter labor force market particularly. This is the case for both the former socialist states of Eastern Europe and the former Soviet Union as well as for some current socialist countries such as Cuba (Kreibaum and Klasen, 2015).

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Authors and Affiliations

  1. School of Economics, Qingdao University, Qingdao, Shandong, China

    Chi-Wei Su

  2. Department of Finance, Ocean University of China, 238 Songling Road, Qingdao, Shandong, China

    Zheng-Zheng Li

  3. Technological Center, Shandong Entry-Exit Inspection and Quarantine Bureau, Qingdao, Shandong, China

    Ran Tao

  4. Department of Finance, West University of Timisoara, Timisoara, Romania

    Oana-Ramona Lobonţ

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  1. Chi-Wei Su
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  2. Zheng-Zheng Li
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Su, CW., Li, ZZ., Tao, R. et al. Can economic development boost the active female labor force?. Qual Quant 53, 1021–1036 (2019). https://doi.org/10.1007/s11135-018-0800-z

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