The Impact of Macroeconomic Indicators on Female Employment in Sri Lanka

Abstract

This study investigates the impact of key macroeconomic indicators on female employment in Sri Lanka over the period 1990–2024, offering critical insights into how economic conditions influence women’s participation in the labor market. Despite advancements in female education and targeted policy initiatives, female labor force participation in Sri Lanka has remained consistently low, hovering around 30–35% in recent decades. Using annual time series data sourced from the World Bank, Central Bank of Sri Lanka, and the Sri Lanka Labour Force Survey, this research employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to analyze the dynamic relationships between GDP growth, unemployment, inflation, and female employment trends. The findings reveal significant long-run and short-run relationships between macroeconomic performance and women’s employment outcomes. While GDP growth positively correlates with increased female labor force participation, high inflation and economic instability disproportionately discourage women’s entry into the workforce, exacerbating existing gender disparities. The study highlights how structural barriers, caregiving responsibilities, and informal sector vulnerabilities intersect with macroeconomic fluctuations, shaping women’s employment decisions in Sri Lanka. By contextualizing these findings within recent economic crises, including the 2022 inflationary shock and subsequent macroeconomic recovery, the research underscores the need for gender-sensitive economic policies to ensure inclusive growth. This study contributes to the literature on gender and development economics by providing localized empirical evidence, emphasizing the importance of policies that address childcare support, flexible work arrangements, and targeted skills development to enhance women’s workforce participation. The insights derived serve as a valuable resource for policymakers, gender advocates, and development practitioners aiming to design effective interventions to improve female employment outcomes, thereby advancing gender equality and fostering sustainable economic growth in Sri Lanka.