It is often argued that female labour force participation is declining in India due to rising incomes that allow more women to stay at home, which is the preferred household choice in a predominantly patriarchal society. However, this column contends that the trend is mainly explained by a scarcity of suitable jobs opportunities outside of farming and close to
Trends in India's female labour force participation ought to be a matter
In a recent paper (Chatterjee, Murgai and Rama 2015), we argue that the explanation for this worrying decline is a jobs deficit. What most working women do in India does not match the image of a nine-to-five job, with a
Voluntary withdrawal from labour force?
A different explanation, the so-called 'income effect', has been the focus of most academic research in recent years1. Higher earnings have gradually allowed more rural women to stay at home, it is argued, and this is a preferred household choice in a predominantly patriarchal society. Other considerations in the recent literature include growing school attendance of young girls and the lack of institutional child support in the context of shrinking family sizes. These explanations are consistent with the fact that female LFPR is much lower in urban areas, as the latter enjoy higher incomes, offer more school choices, and host fewer extended families. While reference is increasingly made in the literature to the availability of
Our paper presents evidence pointing to a less 'voluntary' withdrawal from the labour force than the income effect explanation implies. At an aggregate level, districts which experienced faster wage growth also saw larger declines in rural female LFPR. But the estimated correlation is such that a doubling of wages in real terms – which is what happened in India between 2004-05 and 2011-12 – would only result in a decline in rural female LFPR by around 3 percentage points. Looking more closely, the criterion to assess labour force participation turns out to be excessively stringent. As per the National Sample Survey (NSS) definitions of 'Usual Status' and 'Principal Status', a person is not considered part of the labour force if he or she has not been looking for a job for at least six months during the survey year. As a result, women who were registered with a placement agency, or who worked or sought work under the Mahatma Gandhi National Rural Employment Act (MNREGA), are counted as being out of the labour force. Elsewhere they would most probably be considered unemployed, hence as part of the labour force. If their number is taken into account, the rural female LFPR would be about 3 percentage points higher.
Figure 1. Female unemployment along the rural-urban gradation
Source: Estimates based on the 2004-05 and 2011-12 NSS Employment and Unemployment Surveys.
Scarcity of suitable jobs for women
Beyond the income effect and measurement issues, the main driver of the decline in female LFPR is the transformation of job opportunities at the local level. As elsewhere, urbanisation in India involves rural migration to cities. But it is also characterised by a densification of rural areas, or cities moving to people. As a result, the rural-urban divide is giving way to a rural-urban gradation. One of the innovations of our paper concerns the measurement of job opportunities at a highly disaggregated level along this
In a traditional society, women's work outside the home is acceptable if it takes place in environments perceived as safe and allows for flexibility for multi-tasking. From this perspective, female LFPR can be expected to depend on the availability of suitable jobs such as farming, which
The other innovation in our paper is the explicit incorporation of these job opportunities in the estimation of female labour force participation decisions. We do so in a way that avoids circularity, as causality could also go the other way – from participation decisions to employment levels. Once the local employment structure is incorporated in the analysis, the explanatory power of the supply-side effects considered in the literature is weakened considerably. Interestingly, urbanisation becomes a much less relevant factor in the participation decision than the gap in female LFPR between rural and urban areas would suggest. For a similar local employment structure, there is virtually no difference in participation rates along the rural-urban gradation. Thus, it is the employment opportunities around where a household lives which matter for female LFPR, and not so much where the household actually lives.
The nature of jobs matters
The types of jobs available also
- The literature includes studies by Olsen et al. (2006), Himanshu (2011), Rangarajan et al. (2011), Kannan et al. (2012), Neff et al. (2012), Bhalla et al. (2012), Abraham (2013), Klassen et al. (2013) and Chand et al. (2014).
- Abraham, Vinoj (2013), “Missing Labor or Consistent De-feminization?", Economic and Political Weekly.
- Bhalla, S and R Kaur (2013), 'Labor Force Participation of Women in India: Some facts, some queries', Asia Research Center Working Paper, 40, London School of Economics and Political Science.
- Chand, Ramesh and SK Srivastava, (2014), “Changes in the Rural Labour Market and Their Implications for Agriculture”, Economic and Political Weekly, XLIX(10):47-54.
- Chatterjee, U, R Murgai and M Rama (2015), 'Job Opportunities along the Rural-Urban Gradation and Female Labor Force Participation in India', Policy Research Working Paper 7412, World Bank.
- Goldin, C (1995), ´The U-Shaped Female Labor Force Function in Economic Development and Economic History´, in TP Schultz (ed.)
, Investmentin Women's Human Capital and Economic Development, University of Chicago Press: Chicago, 61-90.
- Himanshu (2011), “Employment Trends in India: A Re-examination”, Economic and Political Weekly, 46(37).
- Kannan, KP and G Raveendran (2012), “Counting and Profiling the Missing Labor Force”, Economic and Political Weekly: 47(6).
- Klasen, S and J Pieters (2013), 'What Explains the Stagnation of Female Labor Force Participation in Urban India?', IZA Discussion Paper, 7597, Institute for the Study of Labour.
- Neff, D, K Sen and V Kling (2012), 'The Puzzling Decline in Rural Women's Labor Force Participation in India: A Re-examination', German Institute of Global and Area Studies, Working Paper, 196.
- Olsen, W (2006), 'A Pluralist Account of Labour Participation in India', Economics Series Working Papers, University of Oxford, Department of Economics, Global Poverty Research Group (GPRG-WPS-042).
- Mammen, Kristin and Christina Paxson (2000), “Women's Work and Economic Development”, Journal of Economic Perspectives, 14(4), 141-164.
- Rangarajan, C, Padma Iyer and Seema Kaul (2011), “Where Is the Missing Labor Force?”, Economic and Political Weekly, 46(39).
- World Bank (2011), 'World Development Report 2012: Gender Equality and Development', Washington D.C.
- World Bank (2012), 'World Development Report 2013: Jobs', World Bank, Washington D.C.