Globalization and Labor Force Participation Nexus: A Cross-Country Analysis

Abstract

This paper analyses the impact of economic globalization on the labour force participation rate of the male and female labour force in both developed and developing countries. For measuring the impact of economic globalization Trade and Foreign direct investment are used as proxies. A sample of 10 developed and 10 developing countries are selected using data from 1990 to 2017. GMM technique is used for estimation purposes. Based on previous literature some critical control variables like Fertility rate, Skill level, Education level, and Per Capita income are used to make our analysis more precise and accurate. Our findings show that FDI has an opposing effect on labour force participation in developed and developing countries i.e. negative in developed and positive for females and insignificant for men in developing countries. The impact of trade tends to be negative in the case of the male labour force in developed countries while positive in the case of the female labour force.