Where are the Mothers: Declining Female Labour Force Participation in India
-Manya Pandey SY BSc.
Estimated reading time: 6-7 minutes
Image Credit: Chandan Khanna/AFP via Getty Images
Suppose I asked you, “What is the cost of leaving your job in 2024?” In the early 2000s, your answer would have varied depending on your gender within a two-person household. Twenty years later, with the anticipation of sociological pressures on women easing due to modernization and technology, one would expect a different scenario. Unfortunately, for the modern Indian woman, that’s not the case. In this essay, I will delve into this divide from a macroeconomic perspective, alongside a general sociological treatment, drawing insights from two recent papers by Monishankar Bishnu et al. and Andrea Silberman et al. on the reasons for the decline in female labor force participation in India.
Focusing on the rural-urban disparity and the role of gender wage differentials, both studies aim to elucidate the factors driving the contrasting trends in female participation rates across rural and urban regions of India.
Key Culprits: Rural-Urban Disparity in Participation Rates and the Gender wage Gap
It’s essential to analyze households from rural and urban areas to understand the representation of women working across different strata. Both studies utilize data from the PLFS and the Employment and Unemployment Survey, revealing a stark contrast in changes in female labor force participation rates between rural and urban areas. While urban areas show relatively stable participation rates, rural regions have witnessed a significant decline. Empirical evidence suggests that this decline is primarily driven by rural women, with their participation rates plummeting from 41.7% to 27.3% from 2005 to 2019. In contrast, urban women’s participation rates have remained almost constant, increasing slightly from 19.5% to 20.2%.
Calibrating the model separately for rural and urban regions allows us for a nuanced understanding of the differential trends in female participation rates. Model simulations indicate that the disproportionate increase in male wages exacerbates the gender wage gap in rural areas, contributing to the decline in female participation rates. Conversely, the gender-balanced wage growth in urban areas does not significantly impact female participation rates over time. Then the composition of economic growth and its effect on the gender wage gap emerge as critical determinants of female labor force participation trends.
A crucial factor contributing to the decline in female participation rates is the widening gender wage gap over time, particularly evident in rural areas. Model simulations demonstrate that male wages grew substantially faster than female wages in rural sectors, leading to a significant increase in the gender wage gap. Conversely, wage growth was more balanced across genders in urban areas, resulting in a relatively constant gender wage gap. This differential evolution of the gender wage gap between rural and urban sectors has profound implications for female labor force participation rates.
Instead of viewing sociological norms as absolute constraints, it’s imperative to understand that these norms make it harder for women who do not conform to them as well. As wage growth for all women remains abysmally low, addressing persistent informality and promoting skills development in industries with growth potential are essential economic measures. Having a place of work not only benefits the household financially but also provides women with identities, networks, and control over their time. While staying home may be an independent choice for some women, for most, it is a demand-side constraint that promises stagnation. The cost of women not working extends beyond monetary loss and has far-reaching and insidious consequences that warrant examination.
Citations
1. Bishnu, M., Chandrasekhar, S., & Murali, S. (2024). Gender Gap and Decline in Female Labour Force Participation in India: A Joint Search Perspective. IIM Bangalore Research Paper, (699).
2, Kapsos, S., Silbermann, A., & Bourmpoula, E. (2014). Why is female labour force participation declining so sharply in India? (pp. 1-51). Geneva: ILO.