Economic Growth and Female Labor Force Participation in Sri Lanka: An Analysis of the U-Shaped Hypothesis (1990–2024)

Abstract

Female labor force participation is widely recognized as a critical driver of economic growth. However, Female labor force participation rates remain low in many developing economies including Sri Lanka. The study scrutinizes the relationship between female labor force participation and economic development over the period 1990–2024 in Sri Lankan Context. with particular focus on the U-shaped hypothesis. Annual time-series data were obtained from the World Bank, the Central Bank of Sri Lanka, and the Department of Census and Statistics. The Autoregressive Distributed Lag (ARDL) model bounds test and Error correction model is employed to examine both the long-run and short-run dynamics between female labor force participation and GDP per capita while controlling for fertility and unemployment rates. The results of the study indicate long-run cointegrating relationship among the variables and provide evidence supporting the U-shaped hypothesis. Specifically, economic development initially reduces female labor force participation but increases it beyond a certain level of economic growth. Furthermore, Female labor force participation in Sri Lanka is negatively affected by while fertility affects female labor force participation mainly in the short run. These findings suggest that more attention should be given to policies that encourage women to join and remain in the workforce. In particular, improving access to skills training and reducing structural barriers can help women participate more actively in the labor market. Policies such as flexible working arrangements, greater support for women in important sectors, and better access to childcare and education could play an important role in increasing female labor force participation. Addressing these issues is essential for unlocking women’s potential and promoting more inclusive economic growth in Sri Lanka.