Feminist economics posts

Booming urban India, stagnating female labor force participation: What gives?

Stephan Klasen and Janneke Pieters

India’s economy has grown fast over the past two decades as women started having fewer children, schooling rates increased rapidly accompanied by decline in the education gender gap, and the labor market returns to education increased. Despite these changes, all of which should have promoted rising participation, urban women’s labor force participation rate has stagnated around 18 percent since the late 1980s, which is very low by the standards of developing countries.

Women operating a cabinet manufacturing business, India.

Women operating a cabinet manufacturing business, India. From Wikimedia Commons.

Using data from 5 National Sample Survey Employment and Unemployment Surveys spanning 1987/88 to 2009/10, we investigated this surprising stagnation of female labor force participation over the past twenty years (Klasen and Pieters 2013).  Our first finding was a U-shaped pattern of the association of female education with female labor force participation. At very low levels of female education, women’s participation rates are high.  They are much lower at medium education levels and rise again at higher levels.  Over time, this U has become more muted and shifted to higher educational attainment levels.  Now the low point is at completed secondary education (compared to completed middle school in the late 1980s) while the increase at the graduate level is much smaller than in 1987/88.  In contrast, male participation rates are close to 100 percent and do not differ by education level.

We examine the sources of the low and stagnant women’s participation rate in urban India. Our results suggest that both demand and supply side effects have played a quantitatively significant role in accounting for this surprising trend. Among the supply effects, rising education and incomes of husbands have served to significantly lower female participation rates through the well-known income effect, particularly for women with low and intermediate schooling. In addition, a strong stigma against blue collar and menial work for women with medium levels of education has persisted and militated against their greater participation. The presence of parents-in-law in the household also serves to lower female participation.

While fertility decline and rising own education helped to increase women’s participation, the positive impact of female graduate education on employment has fallen significantly over time.  We find evidence that this is related to a falling propensity of only women with great labor market orientation to sort themselves into graduate education.  We also find evidence suggesting that part of the expansion of education has been to improve marriage prospects of women, rather than their employment prospects.

But also demand-side factors have played a role.  In particular, we find evidence that the local economic structure matters.  If local employment has expanded in areas that are not considered suitable for women, women’s participation rates have stagnated or declined.  In addition, in districts where the graduate share of the working age population is particularly high, women’s participation has fallen.  Thus there appears to be a (local) oversupply of highly educated workers, relative to the growth in jobs considered appropriate by and for educated women.

The results point to some worrying implications which are also the topic of some discussion in India (Sudarshan and Bhattacharya 2009, Shrinivasan 2013, Subramanya 2013).  First, these low participation rates imply that India is unlikely to reap the demographic dividend associated with its currently favorable demographic constellation of a rising share of the working age population relative to young and old dependents.  In East Asia, this demographic dividend is estimated to have accounted for up to a third of per capita growth rates since the early 1980s.  High and rising female participation was a key element of that effect, which is not present in India; this could seriously undermine India’s growth prospects.  Second, there is overwhelming literature demonstrating the effects of women’s employment and earnings on their bargaining power, with positive impacts on their well-being as well as that of their children.  If India’s growth is not drawing women in, these empowerment effects will not materialize.

What can be done? On the demand side, employment growth in urban India has been concentrated in construction and low-skilled services, but from the perspective of women’s labor force participation a different growth strategy would be warranted; a more female-intensive, export-oriented growth strategy (as has been pursued in many East Asian economies as well as in neighboring Bangladesh) would substantially increase female employment opportunities for those in the middle of the education distribution. On the supply side, policies explicitly promoting the social acceptability of women’s employment outside the public sector (including public awareness and information campaigns promoting female employment in schools, universities, and firms), policies to allow a greater compatibility of women’s employment with domestic responsibilities and policies to improve the safety of women workers in the private sector could also draw more women into the workforce (Jensen 2012). Ultimately, however, values and attitudes towards women’s employment will need to change in order to change this state of affairs.  These changes include the social acceptance of women’s employment for women with children and greater acceptance of female employment in traditionally male-dominated fields.  In this sense, a politicization of the issue might be key.

 

 

Blog references, in order of appearance:

Klasen, Stephan and Janneke Pieters. 2013. What Explains the Stagnation of Female Labor Force Participation in Urban India? IZA Discussion Paper 7597.

Sudarshan, Ratna M. and Shrayana Bhattacharya. 2009. “Through the Magnifying Glass: Women’s Work and Labor Force Participation in Urban Delhi.” Economic and Political Weekly 44, pp. 59–66.

Shrinivasan, Rukmini. 2013.  “No Country for Working Women: A Story in Five Graphs.” Times of India Development Dialogue, March 10, 2013.

Subramanya, Rupa. 2013. “Why Female Labour Force Participation in India is Low.” Business Standard, October 08, 2013.

Jensen, Robert. 2012. “Do Labor Market Opportunities Affect Young Women’s Work and Family Decisions: Experimental Evidence from India.” Quarterly Journal of Economics 127, pp. 753–792.

 

For further reading, see:

Kapsos, Steven and Andrea Silberman. 2014. Understanding the Recent Decline in Female Labor Force Participation in India. New Delhi, ILO, forthcoming.

 

 

 

 

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11 comments
  1. Raj Mankad says: January 15, 20143:47 pm

    What my aunts in India have told me is that the concept of part-time work and flexible hours isn’t really present in India, and that’s why they don’t do paid work.

  2. Sumitra Shah says: January 16, 20147:58 pm

    What an excellent post! I haven’t read the paper yet, so please excuse my question.

    “The presence of parents-in-law in the household also serves to lower female participation.”

    My anecdotal information is that in middle class families, the presence of in-laws in the house or nearby facilitates younger women working in the labor market. If this is not so, what is the reason? Is it that mothers-in-law feel imposed upon, since they did not have the same opportunities when they were younger? It may also be the traditional attitude that if the women work, it is a stigma to the entire family, and the rising middle class may be more sensitive.

    Given women’s preponderance as domestic workers in the economy, the 18% rate is indeed dismal. That means the other jobs are still not occupied by women in any large numbers.

    Sumitra Shah

  3. Sumitra Shah says: January 16, 20148:18 pm

    I found the photo of the women operating the manufacturing plant absolutely fascinating. So I circulated it far and wide to friends and colleagues many of whom are non-economists. A few responses which I found lovely and wanted to share with you all:

    “It is fascinating. This was one of the interesting finding in Katherine Boo,’s book too. Not only did they play a central role, but how smart they were, how politically savvy and what they did to advance their daughters. (Behind the Beautiful Forevers: Life, Death and Hope in a Mumbai Undercity).”

    “A very happy picture, India has made a lot of progress, helping women financially, loans are given easily, but as all over the world women still have not been given their dues, not what they truly deserve.”

    “I liked the photo too. I can’t really define it but they look humble yet capable and proud. CEO’s in saris!! ”

    “Thanks for this! I really like the photo!”

    ” Unfortunately the cultural reasons affect the economic reasons – for the low rate. Hurrah for these women. Let’s hope many more can follow in their foot steps, though this may take quite awhile. What do you think of the progress being made? Slow? Too slow? Getting better? A long way to go? Do these women actually do any of the cabinet work or are they just in charge of the business? Who are the workers?”

    The faces on the women are both so strong and so feminine …
    … the two characteristics are NOT mutually exclusive!
    Thanks for putting a smile on my face,

    Sumitra Shah

  4. Polly Morrice says: January 17, 20146:24 pm

    These are wonderful, thoughtful comments, Sumitra. Thanks for posting them.

  5. Janneke Pieters says: February 5, 20142:33 pm

    Dear Raj and Sumitra, thank you very much for your comments and sorry for the late reply. I recently presented this study to an academic audience in Hamburg, Germany and was asked whether we had looked into working hours and whether we could distinguish more between public and private sector work. The idea was that women might have some opportunities for parttime work in the public sector. We did not consider working hours in our analysis, primarily because it doesn’t seem to be present in India, but I do think the private/public distinction is very interesting. However, my guess is that many of the private/public differences in working conditions cannot be observed in survey data.

    Regarding the presence of mother-in-law, we indeed had two possible effects in mind, namely (1) a restriction on women’s mobility related to social stigma and (2) an increase in labor supply arising from the possibility to share domestic tasks. What is very interesting, but not discussed much in the paper, is that the negative impact is not found in recent years in a subgroup of highly educated women. So if the first channel explains the negative effect, it seems to be present only for women with less than secondary education.

  6. Sumitra Shah says: February 9, 20144:49 am

    Thank you Janneke for your reply. Your observation that in highly educated women the negative effect of social stigma seems to be less or absent is very much observable in the urban areas of India. The reason must be that the changing social attitudes about traditional gender roles have made it less possible for parents-in-law to impose their will. I see it in the families I know and the old rules are fast disappearing. Of course, these are also families of means and much of the household work is performed by hired help, so the mother-in-law is not personally inconvenienced.

    It would be interesting to know if the negative effect exists in the women with less that secondary education. Again, what is observable is that the domestic hired help is made of these women (and also some men for more strenuous tasks). The income the women earn is crucial to the survival of their family members. Their lives are very multifaceted and you would expect them to be economically empowered and therefore immune to the traditional oppressions. Alas, many of them, even those more educated than their husbands are subject to physical violence in some cases. It is disheartening to see patriarchy’s hold still so strong. I would also look at regional difference in India, which can be striking, and were so historically.

    I am waiting for the day when working women become the badge of honor for the family and get the respect they deserve because they contribute to the family’s economic welfare!

    Good luck with the paper as it develops further.

  7. Gunseli Berik says: April 4, 201410:27 pm

    This post is focused on the urban trend in India. The rural trend, by contrast, suggests a feminization of agricultural labor, to the extent that these numbers can be reliably estimated when methodologies of enumeration are changing. And the rural dynamic contrasts with the urban one–a deterioration of labor conditions along with substitution of women agricultural labor for men. I am wondering whether you can comment on the rural trend and its impact on the overall FLFPR in India (does the urban trend dominate the rural?).

  8. Janneke Pieters says: April 16, 201410:49 am

    According to NSS employment and unemployment survey, female labor force participation rates declined between 1987-88 and 2011-12 in rural areas, while they were roughly constant in urban areas. Most of the decline in rural FLFP is observed in the period 2004-2011. We include unpaid family work in the definition of labor force participation, but still the rural trends may well be affected by changes in the nature of work and in reporting.

    With over seventy percent of the population in rural areas, the rural trend dominates the overall trend. If we consider the population aged 15 to 64, and if we include subsidiary status activities in our measure of labor force participation, the NSS data show that overall female labor force participation declined from 45% in 1987-88 to 33% in 2011-12.
    We find similar trends if we only consider principal status activity (i.e. the activity in which a person spends the majority of her time) or if we look at the age group 25-54 (to get rid of the effect of increasing enrollment in higher education).

    If anything, the NSS data show a worse picture for rural than for urban India. But it’s hard to determine how well we can really measure labor force participation in rural areas, especially those dominated by agriculture.

  9. Gunseli Berik says: April 16, 20149:28 pm

    Thanks for this detailed response. These trends are most interesting and somewhat contrary to what small-scale survey results showed for Andhra Pradesh.* That study was done in 2001-2003, so presumably things have changed since then (or the patterns there are atypical of the national patterns). How do you interpret your findings based on NSS data? Are we seeing the results of continued structural change (shrinking agricultural sector)?

    *Garikipati, Supriya and Stephan Pfaffenzeller. 2012. “The Gendered Burden of Liberalization: The Impact of India’s Economic Reforms on its Female Agricultural Labour.” Journal of International Development 24: 841-864.

  10. Farida says: July 26, 20149:38 am

    How does the measure of participation take into account self employment, home based work, informal work, and domestic work in other households? My sense would be that the degree of informal work has increased among women and measuring that is difficult. Take an example – the system of dabbawallas in Mumbai and other places that deliver lunch to work places. The lunch is cooked by women but I have heard little about whether they are paid or whether this is done to support the business of their husbands or relatives.
    It is very puzzling to see the lower participation rates in rural areas, unless there is some home based work that is going on and not being reported now.
    The variations across states depending on literacy/education/urbanization is likely to be high as well?

  11. Janneke Pieters says: August 12, 20143:53 pm

    It is very difficult to say to what extent the NSS surveys capture home based work. The survey asks what type of activity people do most of the time, or part of the time, and in our definition of work we included self-employment and unpaid family work. However, if women report ‘domestic duties’ they are not counted as part of the workforce, though they could certainly also be contributing informally to small businesses run by their husbands, for example. And yes, this type of underreporting could be stronger in rural areas, which might explain the rural-urban difference.

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