Female Labor Market Participation and Economic Growth: The Case of Pakistan

Transcription

1 Female Labor Marke Paricipaion and Economic Growh: The Case of Pakisan Adnan Khaliq (Corresponding auhor) School of Public Affairs, Universiy of Science and Technology of China Posal code, , Anhui, Hefei, China Tel: Dilawar Khan Deparmen of Economics, Koha Universiy of Science and Technology, Koha 26000, Pakisan Tel: Sulan Akbar Deparmen of Economics, Koha Universiy of Science and Technology, Koha 26000, Pakisan Muhammad Hamayun School of Public Affairs, Universiy of Science and Technology of China Posal code, , Anhui, Hefei, China Barka Ullah School of Public Affairs, Universiy of Science and Technology of China Posal code, , Anhui, Hefei, China Received: February 20, 2017 Acceped: June 6, 2017 Published: June 11, 2017 doi: /jsss.v4i URL: hp://doi.org/ /jsss.v4i

2 Absrac Female labor force plays a significan role in he economic developmen of a counry. The core objecive of his paper is o examine he nexus beween female labor force paricipaion rae and Pakisan s economic growh using ime series daa for he period The daa was exraced from World Developmen Indicaors daabase. Augmened-Dickey Fuller (ADF) es was applied o examine he daa for uni roo. The resuls show ha boh he variables--- female labor force paricipaion rae and economic growh---are saionary a firs difference i.e. I(1). The error correcion model (ECM) and Johansen co-inegraion ess were used o examine he co-inegraion relaion beween he variables. The economeric resuls conclude ha here is long-run and a U-shaped link beween economic growh and women labor force paricipaion rae of Pakisan. The resuls conclude ha lower female labor force paricipaion rae leads o lower economic growh in Pakisan. This paper has imporan policy implicaions, suggess ha policies inend o remove such barriers could help o enhance he Pakisan s economic growh. Keywords: Female labor force, Economic growh, Uni roo, Co-inegraion, Pakisan 1. Inroducion This sudy complemens he debae on female labor force paricipaion and economic growh. Female labor marke paricipaion plays an imporan role in he economic developmen of Pakisan. The economic inquiry of female labor force conribuion involved exensive consideraion since he revoluionary works of (Mincer, 1962) and (Cain, 1966). Gender dispariies decrease due o increase of women involvemen in he economy. This improves warm healh and increases women employmen in various secors. In he view of modern heoriss, economic growh is correlaed wih female labor force paricipaion. Educaional opporuniies for women should increase along wih he household responsibiliies. Female labor force paricipaion should par of policy sraegiss. Alhough exensive leaps and srides was observed ha increases he women s paricipaion rae in he labor marke. However, here have been a few concerns and challenges ha need o be addressed and overcome. Women s righs have expeced limied aenion so far, in Pakisani sociey. (Denon, Spencer, Economics, & Populaion, 1997) examined he populaion, labor force and long-erm economic growh using he rend analysis echnique. They found ha in Canada ages are more han 65 years and he populaion growh rae also declines. The main reason is low produciveness raes and furher decline are expeced if immigraion coninues a his rae. Now he Canadian economy mosly depends on immigraion of labor force. The srucural shifs of women s paricipaion in he labor marke are due o income manipulaion and replacemen effecs, and he increase in educaion levels of women in he populaion. In he developing counries, agriculure is he main source of income and employmen. Women are acive paricipans in he labor force. They conribue as family workers on family farms and crops and livesock enerprises. They are no receiving moneary compensaion for his work, bu acknowledged as par of he labor force marke. Economic growh is usually accompanied by srucural changes in he economy. The role of indusry is increasing while agriculure loses is predominance. This is due o lower women s paricipaion in he labor force. Jobs in he early sages of indusrializaion were no aracive 218

3 o women because of he social norms agains heir paricipaion in blue-collar aciviies. (Mammen & Paxson, 2000) explore evidence of a U-shaped curve for niney (90) counries for he period 1970, 1975, 1980 and The resuls conclude a U-shaped paern beween women labor force and economic growh. The conribuion from he riches and he poores counries are more han 50% rae of paricipaion while for he middle income counries his conribuion was 35%. The same resuls were found by (Goldin, 1994). (Tansel, 2002) confirms he U-shaped hypohesis ha exiss beween female labor paricipaion and economic developmen in Turkey for 67 provinces for he years 1980, 1985 and The findings of his paper have posiive and significan impac on female labor supply and negaive impac on unemploymen. (Cakir, 2008) examined he impac of economic developmen on women labor supply for he period in Turkey. The sudy affirms a U-shaped curve in Turkey. (Faima & Sulana, 2009) conclude he U-shaped associaion beween female labor force supply and economic developmen. The sudy uses cross-secional daa for hree periods , and The sudy affirms a U-shaped associaion in Pakisan. (Chaudhuri, 2010) has also revisied he U-shaped hypohesis for one hundred and seveny (172) counries for he period This sudy also affirms a U-shaped associaion beween economic growh and women labor force paricipaion. The sudy furher concludes ha he Souh Asian counries are under he U-shaped curve. These counries are slighly above he U-shaped curve and having he lowes women labor force paricipaion. (Ejaz, 2007) examined he facors affecing female labor force paricipaion in Pakisan s economy. This sudy used he Pakisan Social and Living Sandards quaniy Survey for he period The sudy uses he logi and probi echniques. Resuls of his sudy conclude ha age, level of educaion and marial saus are posiively relaed wih female labor force paricipaion. There are more chances o paricipae in economic aciviies when female belongs o he nuclear family and have enrance o vehicles. While a huge number of children and he accessibiliy of home appliances decrease he chance of female labor force paricipaion. (Nooreen Mujahid & uz Zafar, 2012) have examined he nexus beween he economic growh and women labor force paricipaion in he conex of Pakisan. The sudy uses he ime series daa for he period Error correcion model (ECM) was applied o explore he correlaion beween he economic growh and female labor force paricipaion. The resuls show long-run correlaion beween women labor force paricipaion rae and Pakisan s economic growh. (Noreen Mujahid, 2013) also analyzed he women s labor force paricipaion in Pakisan using ime series daa. The sudy uses rend analysis echnique. The resuls conclude ha women labor force paricipaion in Pakisan is below he inernaional sandard. Mos of he female are working in he informal secor. The sudy furher shows ha he gender discriminaion adversely affecs he female labor force paricipaion in Pakisan. The previous economic lieraure gives a rich discussion on he associaion beween women labor force paricipaion rae and economic growh in developed and developing counries. Individual educaion levels, urbanizaion and unemploymen seem o work o heir disadvanage in he process of decision-making. There is considerable empirical evidence ha 219

4 he relaionship of women labor force paricipaion rae and economic growh is U-shaped, See, for example [Eser (1970), Durand (1975), Kois (1990), Schulz (1991), Tam (2011)]. Res of he paper is organized as follows: Secion wo gives mehodology of he paper. Secion hree explains resuls and discussion of he paper. Conclusion is given in secion four. This secion is followed by references. 2. Mehodology This secion gives mehodology of he paper. I explains he model used in his sudy. I also gives he ype and daa sources. This secion also explains he procedure how o conduc he uni roo es. This secion also gives he procedure for conducing vecor error correcion mechanism (VECM) o examine he long-run relaion. 2.1 The Variables The objecive of his sudy is o examine he associaion beween Pakisan s economic growh and women labor force paricipaion using ime series daa for he period The daa were aken on Gross Domesic Produc (GDP) and Female Labor Force Paricipaion (FLF). 2.2 The Model In ligh of heoreical lieraure and empirical sudies, LGDP and is square are used o capure he U-shaped paern beween women labor force paricipaion rae and economic growh of Pakisan. The general funcion is as under: Where; FLF is female labor force paricipaion rae a ime period. LGDP is naural log of GDP a ime period. is square of log of GDP a ime period. The following general economeric model is used o examine he impac of independen variables on dependen variable. Where; e is whie noise a ime period supposed o be independenly and normally disribued wih zero mean and consan variance. 2.3 The Daa (1) (2) The core objecive of his paper is o examine he nexus beween economic growh and women labor force paricipaion in Pakisan s economy. This paper uses ime series daa for he period The daa have been aken from World Bank and Pakisan Economic 220

5 Survey (various issues). 2.4 Uni Roo Tes Mos ime series daa is no saionary a level. So i is necessary o examine he daa for uni roo. This sudy uses Augmened Dickey-Fuller (ADF) es o examine he daa for uni roo (Dickey & Fuller, 1981). Uni roo es is used o deec wheher he daa is saionary or no. A daa is said o be saionary if is mean, variance and covariance remain consan over ime. Consider he following model AR (1) model: Y Y 1 (3) Y Y p 1 i Y 1 i 1 e (4) Y Y p 1 i Y 1 i 1 e (5) p 1 2 i Y 1 i 1 Y Y e (6) 2.5 Co-Inegraion Tes This es is used o examine he long-run correlaion beween women labor force paricipaion rae and Pakisan s economic growh. Variables having inegraion of he same order could be esed for co-inegraion (Engle & Granger, 1987). Therefore, hese variables are examined for co-inegraion. Johansen co-inegraion es is applied o examine he long-run movemen of he variables (Johansen, 1988); (Johansen, 1991). This es is based on he maximum likelihood esimaion of m-dimensional Vecor Auo-regression (VAR) having p order. The eigenvalue and race saisics are applied (Johansen, 1988); (Johansen & Juselius, 1990). If he race eigenvalue es and maximum eigne value es gives differen resuls hen he resuls of he maximum eigenvalue es are used. The maximum eigenvalue es having grea power as compared o race eigenvalue es (Johansen & Juselius, 1990). The order of Vecor Auo-regression (VAR) of order p in he error correcion model (ECM) model is deermined by minimizing he Schwarz Bayesian crierion (SBC) and Akaike informaion crierion (AIC). The Granger causaliy es based on Vecor Error Correcion Models (VECMs) is as under: j j j 2 FLF i lgdp IGDP ECT i 1 i e (7) i1 i0 i0 FLF a Where: is he difference operaor 221

6 ECT -1 = error correcion erm a ime period -1. The significan error correcion erm is inerpreed as he long run causal effec. 3. Resuls & Discussion 3.1 Gross Domesic Produc and Female Labor Force Paricipaion Figure I shows graph beween naural log of GDP wih ime period. This graph shows ha gross domesic produc (GDP) is increases wih ime. Similarly graph II shows ha female labor force paricipaion rae versus years in case of Pakisan s economy. Female labor force paricipaion rae (% of oal populaion) has been aken along he verical axis and years along he horizonal axis. The graph depics ha female labor force paricipaion is increasing wih passage of ime LGDP Figure 1. Graph of LGDP versus Time 222

7 FLF Figure 2. Female labor force paricipaion versus ime 3.2 Esimaion of Auocorrelaion and Parial Auocorrelaion Funcions Auocorrelaion funcion (ACF) and parial auocorrelaion (PACF) was esimaed o diagnose he problem of auocorrelaion. Table I gives ACF and PACF for LGDP. The resuls show ACF does no die down a all for all lags, which confirms ha LGDP is inegraed and no saionary a level. Table II shows ACF and PACF for DLGDP. The resuls sugges ha ACF dies down a all lags, which concludes ha he series is saionary a firs difference i.e. I(1). Table III explains ACF and PACF for FLF. The resuls shows ACF does no die down a all for all lags, which confirms ha he series FLF is inegraed and no saionary a level. Table IV shows ACF and PACF for DFLF. The resuls sugges ha ACF dies down a all lags, which concludes ha he series is saionary a firs difference i.e. I(1). 223

8 Table 1. ACF and PACF of LGDP Auocorrelaion Journal of Social Science Sudies Parial Correlaion AC PAC Q-Sa Prob. ******. ****** ***** ***** ****. * ***. * **.. * ** *.. * * * * ** Table 2. ACF and PACF of DLGDP Auocorrelaion Parial Correlaion AC PAC Q-Sa Prob.**..** *.. * **..** **.. * **.. * *..** *.. * *.. * * * * **

9 Table 3. ACF and PACF of FLF Journal of Social Science Sudies Auocorrelaion Parial Correlaion AC PAC Q-Sa Prob. ******. ****** ******. * *****. * ****. * ***. * **.. * * * * ** ** Table 4. ACF and PACF of DFLF Auocorrelaion Parial Correlaion AC PAC Q-Sa Prob *.. * *.. * * *.. * *.. * *.. * **.. * * Impulse Response Funcions Resuls of impulse response funcions are given in Figure III. Response of LGDP o LGDP is posiive for all periods. The response of LGDP o FLF is also posiive for all periods. The response of FLF o LGDP has posiive impac on LGDP. Similarly he response of FLF o FLF is posiive and decreasing for all periods. 225

10 Response o Cholesky One S.D. Innovaions ± 2 S.E. Journal of Social Science Sudies Response of LGDP o LGDP Response of LGDP o FLF Response of FLF o LGDP Response of FLF o FLF Figure 3. Impulse Response Funcions of LGDP and FLF 3.4 Uni Roo Tes Resuls Uni roo es is used o check he saionariy propery by using he Augmened Dickey Fuller (ADF) before he es of co-inegraion and granger causaliy. These ess are applied o conduc he inegraion on level as well as on firs difference. The enire variable where he saionariy are esed a inercep and hen rend and inercep. Where he resuls is obained from he Augmened dickey fuller (ADF). The resul shows ha he real GDP and he female labor force (FLF) are saionary a firs difference in below Table I. Table 5. Resuls of Uni Roo Tes Variables Inercep Inercep and rend FLF (0.9973) (0.8710) FLF (0.0028)* (0.0010)* LGDP (0.9985) (0.7167) LGDP (0.0013)* (0.0012)* LGDP (0.9985) (0.7167) LGDP (0.0013)* (0.0012)* 226

11 Figures wihou parenhesis shows -saisics and in parenhesis are p-values.the (*) represening he significance a firs difference and a 1%, including boh inercep and rend & inercep Table V gives ADF es of female labor force, l GDP and l GDP2 a he level boh inercep and rend & inercep are insignifican. Afer hese es we apply he firs difference on female labor force, l GDP and l GDP2 which give he correc answer (significan) a 1%. 3.6 Resuls of Error Correcion Model (ECM) Error correcion mechanism is employed o examine he long-run and shor-run relaionship which also helps o know abou he velociy a which equilibrium will be recovered. ECM also used o represen he dynamic equilibrium of he variables o describe boh shor run and long run relaionship among he variables. Taking he difference of he variables los he long run relaionship. ECM no only correcs he error and makes adjusmen of co-inegraed variables oward equilibrium bu also esimaes he speed a which he endogenous variable recovers he equilibrium afer a change in an exogenous variable. The higher value of coefficien of ECM represens he faser correcion of disequilibrium from shor run o long run. Error correcion model can used exra lagged. Table 6. Resul of Error Correcion Model (ECM) Variable Coefficien -saisics Prob. C D(LOG(GDP) Dlog(GDP) ** E * (*) indicaes he significan level a 5% and (**) indicaes he significan level a 1% Table VI shows ha here is negaive relaionship in shor run beween female labor force rae and GDP on he basis of U-shape hypohesis and hen we ake a square of real GDP which indicaes ha he value of -cal is greaer han -ab which gives a significan resul or posiive relaionships beween female labor force (FLF) and gross domesic produc (GDP). ECM concludes long-run associaion beween women labor force and GDP of Pakisan. The value of R2 is equal o 0.39 shows ha 39 percen variaion of endogenous variable is explained by exogenous variable. The probabiliy value of F-saisic (0.002) indicaes ha overall model is significan and show good fi. The Durban Wason value is which is close o 2 indicaes ha here is no problem of auocorrelaion. 3.7 Johansen Co-Inegraion Tes Since boh he variables are inegraed of he same order i.e. I(1) so Johansen co-inegraion es is applied o examine he long-run relaionship beween or among he variables (Johansen, 227

12 1988); (Johansen, 1991). I is based on he maximum likelihood esimaion of he m-dimensional Vecor Auo-regression (VAR) having order p. The Trace eigenvalue and Maximum eigenvalue saisics are applied o examine he movemen of he variables (Johansen, 1988); (Johansen & Juselius, 1990). Table 7. Co-inegraion Rank es (race) Hypohesized Trace saisic 5% criical value Eigen value None * (0.0000)* A mos 1* (0.0001)* A mos 2* (0.0004)* Noe: The * indicaes significan a 1%. Figures in parenhesis are p-value. Table VII gives resuls of co-inegraion rank es (race). As he Trace saisic values are greaer ha criical values a 5%, shows hree co-inegraing vecors. This es shows ha here is long-run associaion beween women labor force paricipaion and Pakisan s economic growh. Table 8. Co-inegraion Rank es (maximum Eigen value) Hypohesized Max-Eigen saisic 5% criical value Eigen value None * (0.0001)* A mos 1* (0.0092)* A mos 2* (0.0004)* Noe: The * indicaes significan a 1%. Figures in parenhesis are p-value. Table VIII gives resuls of Johansen co-inegraion es (maximum Eigen value) of he Johansen co inegraion rank es. There are also hree co-inegraing vecors as Max-Eigen saisical values are greaer han 5% criical values. So maximum Eigen value es also confirms ha here is long-run relaionship beween he economic growh and women rae of paricipaion. 3.8 Descripive Saisics Table IX shows he descripive saisics of gross domesic produc (GDP) and female labor force paricipaion (FLF) of Pakisan. The mean GDP was Pak. Rupees 6.97E+12 ranging from 4.12E+12 o 1.06E+13 wih sandard deviaion of 2.01E+12. Similarly he mean female labor paricipaion (FLF) was 16.82% ranging from o wih sandard deviaion of

13 Table 9. Descripive Saisics of GDP and FLF ( ) Parameers Mean Median Max. Min. S. Dev Kurosis Skewness GDP 6.97E E E E E FLF Conclusion The objecive of his paper is o examine he relaion beween Pakisan s economic growh and women labor force paricipaion rae in Pakisan s economy. Augmened Dickey-Fuller (ADF) es was applied o examine he daa for saionariy. This es shows ha boh he variables are saionary a firs difference i.e. I (1). Error correcion mechanism (ECM) and Johansen co-inegraion ess were applied o examine he long-run correlaion beween economic growh and women labor force paricipaion. Boh he ess confirmed U-shaped and long-run correlaion beween Pakisan s economic growh and women labor force paricipaion in Pakisan s economy. This sudy suggess ha lower women labor force paricipaion rae leads o marginally lower economic growh in Pakisan. This paper has imporan policy implicaions and suggess ha policies inended o remove such barriers could help o enhance he economic growh of Pakisan. References Cain, G. G. (1966). Married women in he labor force. Cakir, O. (2008). The Relaionship beween Economic Developmen and Female Labor Force Paricipaion wihin he Framework of U-Shaped Hypohesis: Evidence from Turkey. Chaudhuri, S. (2010). Women's empowermen in Souh Asia and Souheas Asia: A comparaive analysis. Denon, F. T., Spencer, B. G., Economics, M. U. R. I. f. Q. S. i., & Populaion. (1997). Populaion, labour force and long-erm economic growh: Hamilon, On.: Research Insiue for Quaniaive Sudies in Economics and Populaion, McMaser Universiy. Dickey, D. A., & Fuller, W. A. (1981). Likelihood raio saisics for auoregressive ime series wih a uni roo. Economerica: Journal of he Economeric Sociey, hps://doi.org/ / Durand, J. D. (1975). The labor force in economic developmen and demographic ransiion. Ejaz, M. (2007). Deerminans of Female Labor Force Paricipaion in Pakisan An Empirical Analysis of PSLM ( ) Micro Daa. The Lahore Journal of Economics, 12, Engle, R. F., & Granger, C. W. (1987). Co-inegraion and error correcion: represenaion, esimaion, and esing. Economerica: Journal of he Economeric Sociey, hps://doi.org/ / Eser, B. (1970). Women's Role in Economic Developmen. New York: S: Marin's Press. Google Scholar. Faima, A., & Sulana, H. (2009). Tracing ou he U-shape relaionship beween female labor force paricipaion rae and economic developmen for Pakisan. Inernaional Journal of Social Economics, 36(1/2), hps://doi.org/ /w

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