The Effect Of Economic Growth And FDI On Participation Of Women In The Labor Market

This paper explores the nexus between economic growth and female labor force participation,testing the feminization U-shaped hypothesis in the context of Southern Africa over the period 2000 to 2018.The study also examines the impact of foreign direct investment inflows on female labor force participation in Southern Africa.Panel threshold effect and fixed effects model are employed to determine the nexus.The dynamic fixed effects regression is run to establish how a set of variables including fertility,self-employment,women’s political participation and female population affect female labor force participation.The analysis is run in two different perspectives-first the relationship is examined for sample encompassing 15 SADC countries;and second-the evidence is disaggregated to re-examine the relationship in three geographic groups(landlocked,not-landlocked and Islands)within Southern Africa.Data is derived from the World Development Indicators,2018 database.The main findings of this study support the hypothesis on U-shaped relationship between economic growth and female labor force participation in Southern Africa.However,the U-shaped feminization hypothesis is not verified in the islands,suggesting that factors other than economic growth may be responsible for changes in female labor force in the islands.The impact of foreign direct investment on female labor force participation is significant in the landlocked and not-landlocked countries.The implication of the results of this study is that the geographic diversity of the countries in SADC should be given consideration when designing female employment policies in the region.The originality of this study is that it employs an estimation technique of threshold effect which is uncommon in the analysis of female labor force participation and still allows for heterogeneity.The paper draws from conflicting views in the literature on labor economics,especially when linked to SADC countries.Women constitute a larger portion of the working-age population in SADC.But they also make up a high percentage of the poor and unemployed population in Southern Africa.Over 60%of households in SADC are headed by women.Due to poverty,most of the women in SADC are engaged in informal employment.While the informal sector may serve as an employment nest for a majority of the poor unemployed women in SADC,it is known for low productivity,income inequality,and poverty.Since the female labor force is the sum of the number of women employed and the number of women unemployed,the rate of female labor force participation requires measurement of both employment and unemployment.Considering the high informality,it may be challenging to determine if female labor force participation is driven by employment or unemployment in SADC.Moreover,the number of women in the labor force is usually lower than that of men across countries and in the world.This is due to existing gender disparities in employment and unemployment patterns and access to quality jobs.So,factors that determine female labor force participation may differ across regions and the income status of economies.Women in low-income countries are known to engage more in unpaid care work or combine formal employment with unpaid care work.Therefore,what determines female labor force participation in SADC may be different from other regions.In this study,we acknowledge that addressing the problem of women’s unemployment requires a comprehensive analysis of factors peculiar to the geographic setup of Southern Africa and measurement of the efforts made to economically empower women since SADC.Therefore,initiatives to improve the economic status of women in SADC might involve assessing the impact of FDI,female self-employers,and women’s political participation on female labor force participation.To that effect,this study looks into such factors by revisiting the renowned feminization U-hypothesis,using the panel threshold effect approach as an alternative to the study of labor force participation and to women empowerment policies.There are some important determinants of female labor force participation that are either inaudible or implied in the feminization U-hypothesis.FDI is implied with economic growth and development.But the direct impact of FDI on female labor force participation is not clear.One of the objectives of this study is to reveal the effect of FDI on female labor force participation in SADC.Many countries in Southern Africa rely on FDI for advancement.Other factors such as the impact of female self-employment and women political participation are not included in the U-hypothesis model yet their revelation can offer insights to the on-going endeavours of SADC to improve economic status of women.