Female Labour Force Participation and Economic Development in Labour Abundant Countries: Evidence from Sri Lanka

Female labour force participation remains low across much of the developing world despite robust economic growth and structural change. Cross-country studies provide contradictory conclusions, while there is little analysis at the country and regional levels. This paper examines the microeconomic determinants of female participation using rich household survey data from Sri Lanka, where participation is low for its level of economic development. It finds household income, secondary education and fertility to lower participation rates. Participation has increased with economic growth, and a decomposition analysis reveals rising education, falling fertility, and weakening income effects to be the main contributors. However, growth has been concentrated in low-skill sectors, in line with comparative advantage, reducing employment prospects for the burgeoning supply of educated women. This is consistent with studies from other emerging markets suggesting it is the nature, not speed, of economic growth that matters for women’s labour force activity.