Analyzing the Influence of Labor Force Participation Rate on GDP Growth Rate in the Philippines: A Regression Analysis

Labor is widely treated as a driver of output growth, yet the evidence on labor force participation and growth in developing economies is mixed, and few Philippine studies have examined this link with single-country time-series data while testing for stationarity and structural breaks. This study examined the association between the labor force participation rate (LFPR) and the GDP growth rate in the Philippines using annual World Bank time-series data from 1997 to 2023 (n = 27). Unit-root tests (ADF, KPSS, Phillips-Perron and Zivot-Andrews) were run before estimation, and an ordinary least squares regression was estimated with dummy variables for the 1998 Asian Financial Crisis, the 2009 Global Financial Crisis and the 2020 COVID-19 pandemic, followed by residual diagnostic tests and Newey-West robust standard errors. LFPR was integrated of order one, while the GDP growth rate was stationary. With the crisis years controlled, LFPR had a statistically significant negative association with GDP growth rate (β = -0.268, p = .007; robust p < .001), and all residual diagnostics were satisfied; in non-crisis years, LFPR explained about 29% of the variation in GDP growth rate. This is an association and not a causal effect, as only one explanatory variable and observational data were used; omitted factors (e.g., capital formation/productivity) may explain part of it. The study adds single-country time-series evidence from the Philippines to a literature dominated by cross-country and panel studies, and suggests that labor policy may need to focus on the quality and absorption of jobs rather than on participation alone.