Assessing the Nexus between Female Labor Force Participation and Economic Development in Sri Lanka

The labor force’s active participation is vital for boosting economic growth of a country in the precise direction. The participation of women in the labor force leads to higher living standards and increased aggregate output. Thus, the present study investigates the relationship between economic growth and female labor force participation, by considering economic growth as dependent variable and female labor force, fertility rate, population growth, and gross capital formation as independent variables, with a focus on Sri Lanka by using time series data from 1990-2020 and evaluating the long-term and short-term relationship between the variables through the Autoregressive distributed lag approach. The findings of the study confirm that women’s labor force participation have a significant negative impact on Sri Lanka's economic growth in the long run at the 10% significant level but no relationship between in the short run. Further the Error Correction Term (ECT (-1)) value of 95.56 indicates that the short-term imbalance in economic growth due to external shocks will be corrected every year at a rate of 95.56 and move towards long-term equilibrium. Higher education and potential skills and availability of suitable jobs creating avenues to females increase their participation in the labour market. Hence, policymakers must create strategies to harness the economic potential of women in the workforce.