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Does FDI encourage female labor force participation? Evidence from Arab countries

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  • Manuchehr Irandoust

Abstract

This study examines the impact of foreign direct investment (FDI) on women's labor force participation in 14 Arab countries from 1991 to 2021. Theoretically, FDI supports gender equality by creating more jobs for women, providing them with better working conditions, and increasing their wages relative to those provided by local firms. It also does this via increasing the demand for labor and technological spillovers. Unlike previous studies, we utilize likelihood-based panel cointegration and multivariate analysis to examine cointegration between the variables, considering cross-sectional dependence and slope heterogeneity. The results demonstrate that FDI inflows boost women's participation in the labor force in nearly half of the sample countries. Policywise, the findings imply that FDI inflows can assist central governments in achieving better gender development and equality through either higher female labor demand or sustainable labor practices and gender-equal norms.

Suggested Citation

  • Manuchehr Irandoust, 2024. "Does FDI encourage female labor force participation? Evidence from Arab countries," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(3), pages 174-189, July.
    • Handle: RePEc:pal:buseco:v:59:y:2024:i:3:d:10.1057_s11369-024-00365-3
    DOI: 10.1057/s11369-024-00365-3
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    More about this item

    Keywords

    Female labor force participation; Gender gap; FDI; Cointegration;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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