Does oil wealth matter to female labour force participation: New evidence from the oil-intensive economy of Saudi Arabia

Abstract

The study aims to examine Ross's (2008) hypothesis providing new empirical evidence by considering the oil intensive country of Saudi Arabia. Using an autoregressive distributed lag (ARDL) bounds test, we identified that oil production correlates negatively with female participation in the labour force, supporting Ross's argument that in countries rich in oil production there is a resulting lack of female representation in the labour force. Our results remain robust when using alternative measures of oil resources. In addition, by sector our empirical investigation shows that while oil wealth hinders female employment in the tradable sector (industry), it fosters female employment in the non-tradable sectors (services) of the Saudi economy. Thus, the findings suggest that the harmful impact of oil wealth on female employment in Saudi Arabia is more pronounced in the industry sector than in services. Great attention needs to be directed by government to adopt economic strategies that focus on developing manufacturing-based industries coupled with greater expansion in the services sector, apart from oil activities to create wider employment opportunities for females.