Impact of Trade, FDI, and Urbanization on Female Employment System in SAARC: GMM and Quantile Regression Approach

Abstract

The fundamental objective of this research is to learn how trade liberalization, male employment, urbanization, and foreign direct investment (FDI) affect women’s participation in the labor force. To continue, this study aims to determine the effects of trade and other factors on women’s employment in three distinct sectors (i.e., agriculture, industry, and service). From 1991 to 2021, we analyzed data from eight SAARC countries. The study’s theoretical foundation was the Cobb–Douglas production function. To better understand the connections between trade liberalization and the SAARC labor market, this paper used panel quantile regression (QR) and generalized method of moments (GMM) to empirically explore the key determinants of female employment in total and three sub-sectors. The QR method was used in the study because it looks at how variables affect each other beyond the data mean. Additionally, our data set does not follow a normal distribution, and the connection between the explained and explanatory factors is non-linear. Trade openness has a beneficial effect on total female employment throughout system GMM and all quartiles. Total female employment also benefits from an increase in GDP and FDI. However, women’s access to the workforce is hampered by urbanization. Many strategies for increasing women’s participation in the workforce across three sectors are addressed in this article. The major finding of this study is the rate of change in female employment across three industries. Women’s participation in the service and manufacturing sectors increases, whereas their participation in agriculture decreases, as a result of increased trade openness. Although these studies can assist policymakers in choosing the best feasible trade adjustments, they will also add to diverse academic and policy discussions on trade liberalization and its gender consequences. Since trade has become more accessible, more and more women are entering the workforce. Therefore, workers should acquire industrial and service-sector-related competencies.