This paper investigates the relationship between female labour force participation rates and economic growth in southern Mediterranean countries. A two-step methodology involving econometric estimations and the use of a general equilibrium model was used for this purpose.
The econometric estimations suggest that there is a U-shaped relationship between economic growth and female labour force participation rates and they indicate the presence of region-specific barriers impeding women’s entry into the labour force in southern Mediterranean countries.
The econometric results were fed into a general equilibrium model, the GEM-E3-MEDPRO, which was used to simulate two alternative assumptions on developments in female labour participation rates in the region up to 2030. The first of these simulated changes in female labour force participation rates arising from income level trends projected for the period 2015–2030 in southern Mediterranean countries. The second assumed the lowering of region-specific barriers which deter female labour force participation.
The results of these simulations suggest that lower female labour force participation rates may lead to marginally lower economic growth in the region, while the removal of region-specific barriers to female labour force participation may encourage economic growth. This has important policy implications, suggesting that policies intended to remove such barriers could help to promote the growth of the region’s economies.