The Nexus of Economic Growth, Education, Fertility Rate and Female Labour Supply: Empirical Evidence in Malaysia

Abstract

Malaysia, a fast-growing developing country in Asia, has envisioned Shared Prosperity Vision 2030 to become a developed economy with high income via sustainable and inclusive economic growth by the year 2030. To accomplish this vision, female labour participation is needed as the female population constitutes almost half of Malaysia’s total population. However, female labour participation rate is way lower than Malaysia’s overall labour force participation rate.The relatively low female labour participation rate can be a barrier to Malaysia’s economic development and thus the realization of its goal of a high income nation.Therefore, this paper makes an attempt to examine empirically the long-run causal association among female labour force participation, economic growth, education, and fertility rate. The interrelationships among the variables are examined using the bounds test and Toda-Yamamoto granger non-causality methodology. The result of the study indicates a strong evidence of long-run relationship among the variables. Besides, we have found a significant inverted-U-shaped association linking the female labour force participation to the economic growth in Malaysia. The results of Granger causality tests further confirm that there is a strong evidence of bidirectional causality from education to economic growth as well as female labour participation. Besides, the results also show significant unidirectional causality from female labour force participation and fertility to economic growth.