The effect of macroeconomic factors on female labor force participation in Developing-8 (D8) countries: A demand-side analysis

The past few decades have witnessed decreasing trends in female labor force participation (FLFP) around the developing countries, particularly in D-8 countries (Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan, and Turkey) despite substantial expansion of female education, sharp fertility decline, and favorable economic conditions. Thus, the main objective of this study is to examine the effect of demand-side macroeconomic factors on FLFP in D-8 countries. Factors included are economic growth (GDP), trade openness (TOP), foreign direct investment (FDI), urbanization, and tourism, involving the interactive effect of cultural diversity, religious diversity, political environment, level of education and infrastructure. This study incorporated the Structural Change theory and Feminization U hypothesis, using two panel data streams from 1980-2018, 1995-2018, and annual time-series data from 1980-2018. The Pooled Mean Group (PMG) and Autoregressive Distributed Lags (ARDL) findings revealed the statistically significant and positive effect of GDP and tourism on FLFP, while TOP, FDI, and urbanization registered mixed evidences. Although primary enrolment, ICT, and transport infrastructure enhanced the positive impact of economic growth on FLFP; ethnolinguistic, religious diversity, political environment, secondary and tertiary enrolment, and electricity impeded those positive effects. Indeed, the feminization U test revealed that most D-8 countries experienced nonlinear associations between GDP per capita and FLFP, with only Egypt, Nigeria, and Turkey registered the traditional U-shape of the Feminization U hypothesis. As a conclusion, the macroeconomic structure is vital to enhance the opportunities for FLFP. Hence, inclusive macroeconomic policies including trade orientation, proper diffusion of technologies, skill development training programs, access to infrastructure and political reforms are highly recommended to enhance labor policy that fully reaps the FLFP potentials in D-8 countries.