The impact of fiscal policy on female labor force participation in Egypt

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There is no doubt that women play a vital role in all aspects of economic activities around the globe. However, despite the great efforts that governments have made over the past three decades to increase women’s integration into the labor market, their participation is still relatively low compared to men. On the other hand, economic literature argues that the government can use fiscal policy tools such as tax revenue and spending to decrease gender inequality in the labor market. The aim of this paper is to investigate the impact of government spending and tax revenue shocks on the female labor force participation rate (the share of women in the total labor force) in Egypt. Annual time-series data were collected from the Central Bank of Egypt and the World Bank from 1990 to 2021, where the vector autoregressive (VAR) model and impulse response functions have been used. The results suggest that government spending and tax revenue shocks increase gross domestic product (GDP) growth rate, female labor force participation, and inflation. Results validated the research hypotheses and showed that a one standard deviation shock to either government spending or tax revenue has a positive impact on female labor force participation. Therefore, the study recommends that using an expansionary fiscal policy may increase the accessibility of Egyptian women to the labor market.

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    • Figure 1. Responses to government spending shocks
    • Figure 2. Responses to tax shocks
    • Table 1. Definition of the study variables
    • Table 2. Descriptive statistics
    • Table 3. Augmented Dickey-Fuller test with intercept
    • Table 4. Augmented Dickey-Fuller test with trend and intercept
    • Table 5. Augmented Dickey-Fuller test with no trend and intercept
    • Table 6. Lag selection criterion test
    • Table 7. Diagnostic tests for the VAR model
    • Conceptualization
      Emad Attia Mohamed Omran
    • Data curation
      Emad Attia Mohamed Omran
    • Investigation
      Emad Attia Mohamed Omran
    • Methodology
      Emad Attia Mohamed Omran
    • Software
      Emad Attia Mohamed Omran
    • Visualization
      Emad Attia Mohamed Omran
    • Writing – original draft
      Emad Attia Mohamed Omran
    • Formal Analysis
      Yuriy Bilan
    • Funding acquisition
      Yuriy Bilan
    • Project administration
      Yuriy Bilan
    • Resources
      Yuriy Bilan
    • Supervision
      Yuriy Bilan
    • Validation
      Yuriy Bilan
    • Writing – review & editing
      Yuriy Bilan