Effect of fertility rate on female labor participation and economic growth in selected Asian countries

Abstract

Fertility has been experiencing a significant decline all over the world including in Asian countries as a result of rapid social and economic development. It is important to know what factors determine the fertility rates and their effects on female labor participation and economic growth to support the population program in each country. This study attempts to review the fertility condition and replacement fertility as well as investigates factors that influence fertility rates, and their consequences on female labor and economic growth in 27 Asian countries from the period 1990 to 2018. The finding of replacement fertility showed different results across countries depending on the country’s characteristics against the general assumption which has an equal value at 2.1. The determinants of fertility rate include female labor force participation, infant mortality, cost of raising children, income, and female education. This study found that a factor reducing the fertility rate is the increasing cost of raising children, while female labor participation and income affect positively. Interestingly, infant mortality and female education are not significant in affecting fertility. Simultaneously, the effect of fertility on female labor force participation revealed that fertility significantly reduces female labor participation in the short run, while female education positively affects female labor participation in the long run. For the last objective on fertility and economic growth, in the linear model, low fertility is found to lead to higher economic growth. Furthermore, for the fertility-labor interaction model, the coefficients of its interaction are negative. The negative coefficient of fertility-labor interaction means a reduction in fertility rate yields a greater increase in economic growth with a higher level of labor participation and the effect of changes in labor participation on economic growth will depend on the level of fertility in the country. Several recommendations are suggested for the policymakers to maintain the fertility rates do not fall under replacement fertility or too high as both will create problems. The policymakers in low fertility countries are advised to encourage people to enter marriage life and ensure the availability and accessibility to the basic needs of children especially for health and education, so people will not have to worry about having more children. While in high fertility countries, the policymaker needs to control family planning programs and provide better public health facilities. The provision of accessible and affordable childcare and removing the barrier to re-entering the labor market for female workers are important to support and motivate females to participate in the labor force.