The Relationship Between Gender Equality and Inclusive and Sustainable Economic Performance: Evidence From European Union Countries

Gender equality is widely recognized as a key driver of inclusive and sustainable economic development, yet its economic impacts vary across European Union (EU) member states. This study investigates the long‐run relationship between gender equality and economic performance in the 27 EU countries during 1991–2022. Specifically, it examines the effects of gender equality on foreign direct investment (FDI), women's labor force participation, renewable energy consumption, trade openness, and employment in the agricultural, industrial, and service sectors. To establish the statistical properties of the panel data, the analysis applies cross‐sectional dependence, panel unit root, slope heterogeneity, and Westerlund cointegration tests. Long‐run relationships are then estimated using the Method of Moments Quantile Regression (MMQR) and Feasible Generalized Least Squares (FGLS), enabling the identification of heterogeneous effects across different levels of economic performance. The findings indicate statistically significant long‐run associations between gender equality and women's labor force participation, renewable energy adoption, foreign direct investment inflows, trade openness, and sectoral employment. Quantile estimates reveal that these positive effects are strongest in countries with relatively lower levels of gender equality, indicating diminishing marginal returns as equality improves. Furthermore, gender equality generates larger employment and investment gains in lower‐performing economies than in countries with more advanced gender equality outcomes. Overall, the results suggest statistically significant long‐run relationships between gender equality and productivity, competitiveness, and sustainable economic performance. These findings provide policy evidence supporting country‐specific gender equality reforms to foster inclusive growth and strengthen the European Union's long‐term sustainability agenda.