Does FDI encourage female labor force participation? Evidence from Arab countries

Manuchehr Irandoust ()

Business Economics, 2024, vol. 59, issue 3, No 7, 174-189

Abstract: Abstract This study examines the impact of foreign direct investment (FDI) on women's labor force participation in 14 Arab countries from 1991 to 2021. Theoretically, FDI supports gender equality by creating more jobs for women, providing them with better working conditions, and increasing their wages relative to those provided by local firms. It also does this via increasing the demand for labor and technological spillovers. Unlike previous studies, we utilize likelihood-based panel cointegration and multivariate analysis to examine cointegration between the variables, considering cross-sectional dependence and slope heterogeneity. The results demonstrate that FDI inflows boost women's participation in the labor force in nearly half of the sample countries. Policywise, the findings imply that FDI inflows can assist central governments in achieving better gender development and equality through either higher female labor demand or sustainable labor practices and gender-equal norms.

Keywords: Female labor force participation; Gender gap; FDI; Cointegration (search for similar items in EconPapers)
JEL-codes: E24 J16 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s11369-024-00365-3

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