Economic Growth-Female Labour Force Participation Nexus: An Empirical Evidence for Pakistan

Abstract

Economic literature shows significant attention towards the role played by female labour force in the economic development of nations. The structural changes of economies from agriculture to industrial and services sector reduce the female labour force participation in case of developing nations. The activities of female labour force increases in the later stage of economic development due to increase in education and dynamics of economic activity. As the size of the economy expands females have easier and better access of jobs thus are encouraged to become economically active, it leads to increase female participation in the productive activities. The participation of female labour force is desirable for both equity and efficiency reasons. The equity aspect shows that the women’s participation in the labour market ultimately improves their relative economic position, increase the overall economic efficiency by enhancing the development potential of the country. Moreover, the increasing integration of women in the economy helps in reducing gender disparities in education, improving maternal health, increasing sectoral share of female employment in different sectors of the economy, demonstrating the hidden contribution of women as unpaid family worker especially in agriculture sector. According to the modernisation theorists, economic development is positively associated with female labour force participation through change in the occupational structure and increase in educational opportunities along with the household responsibilities. The modernisation process is linked with increased demand for labour, a general social acceptance of women’s education and employment as well as lower fertility [Heckman (1980); Standing (1981); Bauer and Shin (1987)]. A body of theoretical and empirical literature provides evidence that female labour force participation has a positive and strong relationship with economic growth [Tansel (2002) and Fatima and Sultana (2009)].