Figures 1 and 2 show a
graphical representation of the regression of the pooled data. The graph
further verifies the existence of U-shaped curve explaining the relationship
between female LFPR and economic growth.
The Panel Vector Error
Correction Model (VECM) is said to be more reliable if the variables show a
trend of cointegration. Initial results from the Augmented Dickey Fuller test,
followed by the Johansen Cointegration test, showed robust results and thus,
the Panel VCEM could be used. The OLS results from this model resulted in
drastically different figures, as seen in Table 2. The Durbin Watson test
indicates no autocorrelation, as opposed to the previous estimate which
suggests positive autocorrelation. However, in case of VECM, the regressors
were seen to have long term as well as short term impact on FLFP rate.
The major world trends in
case of female LFPR show that between 1995 and 2015, the global female labour
force participation rate decreased from 52.4% to 49.6% (ILO,2016). This might
lead us to question the results for the pooled data. However, it is interesting
to note that economic growth hasn’t been constantly rising. This evidence
suggests that the results of our study may in fact be true. The U-shaped curve
may truly exist for the world economy as a whole. The curve may however be
increasing at a diminishing rate, as suggested by the VECM results. The reason
for the drop in both factors in the recent times could be attributed to the
order to study the relation between the two variables in the context of
development, a regression on the varying income levels was carried out. The
data used was the compressed figures given by the World Bank. The trend seen
for high income countries was an upward sloping line, which is consistent with
the hypothesis. Within the given time frame, developed countries should be
witnessing an increase in the FLFP rate. For instance, Denmark, popularly known
for its traditional an agricultural driven economy, has turned increasingly to
manufacturing since end of World War II. As of 2005, however, the service
sector captured over 73% of the total labour force. Furthermore, the official
micro census in Germany suggests that, in recent years, female-dominated
sectors, such as health and social services, and education have grown
substantially. In the traditionally male dominated industries such as
manufacturing, however, labour market developments have been less appealing.
Also, the increased participation of women in the labour force is primarily
attributed to the increased level of education of women.
the trend seen in low income countries seems to follow the same trajectory.
This can be understood when the dominant sector in most of these economies is
seen to be agriculture. The Kenyan informal sector is gaining more and more
prominence as a source of obtaining employment and earning incomes. The formal
sector is slackening and this is due to numerous causes. Among these are – the
recession prevalent in the early 1990’s induced by the disagreeable weather
conditions and an observed economic decline in the agricultural and
manufacturing sectors which are the core of the Kenyan economy. Public sector reforms like retrenchment and a
rather restrictive government employment policy have constrained this sector
from generating employment. (ILO/EAMAT, 1999). An increased tendency of labour
shedding is observed in the private sector and this is mainly caused by
restructuring. The formal sector fails to enlarge itself and this can be
attributed to certain restraints like huge risks involved, inadequate
infrastructure and the absence of social capital (Bigsten and Horton, 1997).
The fall in employment in the formal sector is followed by a rise in the
employment by the informal sector. One of the significant features of the rise
of the informal sector is that it comprises of a large number of female
employees. Female labour is concentrated in unpaid family work, the
agricultural and the informal sector. To be noted is also the fact that an
upward trend observed in the case of female labour force participation is Kenya
corresponds with a downward trend in the
fertility rate during the same period.
the three factions of the middle-income group- low, middle and high, are seen
to showcase a downward sloping trend. The reasons for countries not following
the trend could also be attributed to the time period that was considered. In
case of India, the major period in which the decline could be seen would have
been the period of Green Revolution which was essentially in the 1960’s. Also,
another interesting case in point for India is that, the Indian economy has
completely skipped the manufacturing stage in its economic transition. This
however, cannot explain the reason for the decline in female LFPR in India. The
time period for developed countries should have been dated to an older one, as
they are currently witnessing slower growth rates. Most of them have already
made the transition from an agro-based economy to a manufacturing or
service-based one. There is also the fact that the decline in these economies
is not restricted to the female LFPR.
Developing countries may be on the
same trajectory as the developed countries, as far as FLFP rate is concerned.
However, the manner of this absorption shows variations. Studies conducted on
labour have shown that FLFP rate has risen over time. However, in most
developing countries, the bulk of women’s work is considered to take place in the
“non-market” economy, either at home or in the informal economy (World Bank
This suggests that collectively, countries behave in the same manner as put forth
in the hypothesis.
This section focuses
on some constructs that are known to have some impact on the entry of