Trade and gender gap in labour force participation in sub-Saharan African countries: Unveiling the role of financial inclusion

Abstract

This study examines the relationship between trade and the gender gap in labour force participation, focussing on the moderating roles of financial inclusion across 48 SSA countries from 2005 to 2023. It utilises a panel data approach. Because of potential endogeneity issues between labour force participation and financial inclusion, the study employs the instrumental variables Generalised Method of Moments (IV-GMM) estimator to address this problem. The results show that the lagged dependent variable is statistically significant in all models, indicating a strong persistence of the gender income gap over time. This suggests that historical inequalities heavily influence current disparities, reflecting structural and institutional inertia. Trade openness appears to be linked to a reduction in the gender gap in labour force participation, though this effect is only weakly significant and becomes less consistent in expanded models. Financial inclusion variables, measured by the number of depositors and borrowers, also exhibit negative but statistically insignificant coefficients. These findings imply that while financial inclusion could help reduce the gender gap in labour force participation, its individual effects are limited and not robust across different specifications. Nonetheless, the interaction effects between trade and financial inclusion provide more promising insights.