Sustainability of Women’s Employment Rate for Malaysian Economic Development

Abstract

This research paper develops a model for the sustainability of women’s employment rate in Malaysia’s economic development. This study examined annual data from 1982 to 2018, with 37 observations. A new econometric method was adopted to determine both short-run and long-run relationships among the variables using the Johansen Cointegration rank test, Vector Error Correction Method (VECM) with error correction model of cointegration equation. The VECM results revealed significant and positive short-term relationships between foreign direct investment, gross domestic product (GDP), and the negative short-term relationship of the lagged period of women’s employment rate to women employment rate (WER). The variables, GDP, education level, and women’s marital status are cointegrated and have a long-term relationship between WER in the cointegration equation. The Johansen Cointegration rank test also showed the existence of cointegration equations, and a long-term relationship between the variables. Eventually, the residual diagnosis, significant error term, and the performance of the model evaluation were found as satisfactory and valid. In short, this research paves the way for policymakers to construct a better policy for the future of women’s employment sustainability.