Abstract
Purpose – The purpose of this paper is to examine the impact of adolescent fertility on Foreign Direct Investment (FDI). We used data for cross country data for the year of 2014 to unravel the causal relation.
Design/methodology/approach – To eliminate the risk of possible omitted variable bias, and reverse causality we use an instrumental variable approach. The instruments used are the plow use variable, and the variable showing the years since the transition to agriculture identifying the male dominant cultural values.
Findings – 2SLS estimation results indicate that adolescent fertility increases FDI implying that an increase in early age fertility increases FDI inflows. In particular, the result shows that the lower bargaining power of the women at the job market due to a rise in early age fertility would stimulate FDI inflows.
Research limitations/implications – The research proposes the presence of causality running from adolescent fertility to FDI and invites future empirical investigation using richer data set.
Originality/value – The results provide significant implications for both gender distribution of labor market earnings and the international macroeconomics. The study is the first study in the literature exploring the nexus between these variables, thus, has significant contribution.
Paper type – Research paper
Keywords – Adolescent Fertility, FDI, Plow, Two Stage Least Squares