Photo: AFP
Photo: AFP

Gender gap at work

India has one of the lowest rates of female participation in the labour force. That holds back economic growth

It is no secret that Indian women get a raw deal. One striking measure of this discrimination has been highlighted in a background paper published by the International Monetary Fund (IMF) last week, as part of its annual assessment of the Indian economy.

India has a gender participation gap that is higher than all Group of Twenty (G-20) nations other than Saudi Arabia. The gender participation gap is the difference between the labour force participation ratios for males and females in a country.

An Indian male of working age is almost thrice as likely to have a paid job than an Indian woman of working age. And the gap in urban India is wider than in rural India because there is less distress employment in the cities than there is in the villages. There is a gender participation gap of around 60 percentage points in urban India while there is a gap of around 45 percentage points in rural India.

There are two more puzzles that are worth highlighting.

First, while the fact that India has one of the lowest levels of female labour force participation among emerging markets could be because of structural problems, it is not at all clear why women have withdrawn from the labour force after 2005 despite the rise in incomes. India is unique in this respect: most other emerging market economies have seen more women enter the labour force in recent decades. The most likely possibility is that higher rural wages since 2005 pushed up family incomes to an extent that families decided it was time to bring women back into the kitchen. This in turn means that women are pushed into the labour force during times of economic distress rather than pulled into it by attractive employment opportunities.

Second, the trends in female labour force participation across states is also worth a closer look. The general picture is on expected lines. Indian states in the southern and eastern parts of the country do better than the northern states. Bihar has the worst record. But then, Uttar Pradesh does better than Punjab. Chhattisgarh does better than Maharashtra. Kerala has only a middling record. These puzzles suggest that untangling the role of social and economic factors is a worthwhile task: how much of the low female labour force participation in various states can be explained by economic factors and how much by social factors?

IMF’s economists have provided some useful statistical insights into what affects female labour force participation in various states. Their regression analysis suggests that the probability of a woman being in the workforce goes up when she is highly educated but drops depending on the number of children she has. States that have more flexible labour markets tend to have more women in their workforce. A flexible labour market also increases the chances of a woman getting work in the formal rather than the informal sector.

Women in states that have better road networks are more likely to have jobs outside the home. And higher social spending as a percentage of state output helps women seek work.

The standard models of economic growth show that the size of the labour force is an important driver of any economy. That is the root of all the intense debates about the demographic dividend. Several economists have shown through their empirical work that low female labour force participation ratios hold back economic growth.

David Dollar and Roberta Gatti of the World Bank argued in a 1999 paper that gender inequality arising from either social prejudice or market failure is in effect a distortionary tax that hurts economic growth.

Less than a third of Indian women of working age are in the labour force. The female labour force participation ratio in East Asia at a similar stage of development was perhaps twice as high. Only Sikkim, Himachal Pradesh and Meghalaya come anywhere close to those levels right now.

The diversity of our states also means that much depends on what is happening at the subnational level. The IMF analysis suggests that the pace of change will be linked to what happens on several fronts, from education levels to road access to labour market reforms. IMF’s economists have not explicitly considered violence against women as an explanatory variable in their statistical analysis.

All this leads to one final point: the tragic story of the girl who was brutally raped in a moving New Delhi bus in 2012. She worked hard to educate herself so that she could get a good job in the big city. Her father sold his farm land to get his daughter through college. Millions of girls like her face immense obstacles in their quest to build a new life. A large majority of them succeed.

But it is not easy going: everything from social pressure to harassment outside college gates to unlit streets are challenges. The problems they battle humanizes the dry academic discussions about the abysmally low female labour force participation ratios in India.

Niranjan Rajadhyaksha is executive editor of Mint.

Comments are welcome at cafeeconomics@livemint.com. To read Niranjan Rajadhyaksha’s previous columns, go to www.livemint.com/cafeeconomics

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