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The Role of Foreign Direct Investment Inflows on Labour Force Participation Rate of Women: A Dynamic Panel Data Analysis

Author

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  • Adem Gök

    (Kırklareli University)

  • Merve Ünlüoğlu

    (Eskişehir Osmangazi Üniversitesi)

Abstract

To empirically test the role of foreign direct investment (FDI) inflows on female labour force participation rate, we developed two hypotheses in the theoretical perspective. The first hypothesis assumes that FDI inflows have positive significant effect on female labour force participation rate, and the second hypothesis assumes that FDI inflows have negative significant effect on female labour force participation rate. Since there should exist structural differences for countries with respect to female labour force participation rate, we divided 109 countries into two as 71 high- and 38 low-performing countries with K-means clustering approach over the period of 1996–2021. According to the results of the System GMM estimation, we found that Hypothesis 2 is valid for high-performing countries, and Hypothesis 1 is valid for low-performing countries. We also found that female participation in labour force is self-reinforcing due to strategic complementarity between the past and current levels of labour force participation rate of women.

Suggested Citation

  • Adem Gök & Merve Ünlüoğlu, 2024. "The Role of Foreign Direct Investment Inflows on Labour Force Participation Rate of Women: A Dynamic Panel Data Analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 67(2), pages 523-546, June.
    • Handle: RePEc:spr:ijlaec:v:67:y:2024:i:2:d:10.1007_s41027-024-00499-0
    DOI: 10.1007/s41027-024-00499-0
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    More about this item

    Keywords

    FDI inflows; Female labour force participation; Gender gap; K-means clustering; Women’s participation; System GMM;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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