The Cyclical Effects on Labor Force Participation: A Study of the Saudi Labor Market using ARDL Techniques
Received: 20 October 2024 | Revised: 22 November 2024 | Accepted: 27 November 2024 | Online: 2 February 2025
Corresponding author: Jumah Ahmad Alzyadat
Abstract
This article assesses the cyclical effects on Labor Force Participation (LFP) in the Saudi labor market. The Discouraged Worker Effect (DWF) and Added Worker Effect (AWF) for men and women LFP rates were examined by applying the Autoregressive Distributed Lag (ARDL) method. The results showed the existence of AWF in the long run in the case of women. They also confirmed that the women's LFP rate is countercyclical to economic activity and procyclical to unemployment and inflation rates. However, there is no evidence of the impact of the unemployment rate and economic cycles on women's decision to participate in the labor force in the short run. Moreover, the results support the invariance unemployment hypothesis for men's decision to participate in the labor force. This means that these factors do not affect men's decision to join the workforce, but other factors make them look for work to increase income. This study also suggests that women can be motivated to enter the labor market if their chances of finding work are improved through an active economic policy that creates jobs for both men and women.
Keywords:
Labor Force Participation (LFP), Added Worker Effect (AWF), Discouraged Worker Effect (DWF, Saudi labor marketDownloads
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