Intro

Women’s socioeconomic role goes unrecognised in India. Most women work as unpaid caregivers,
household managers or in other home-based positions; only a minority work outside the house.
While women are better educated and enjoy improved healthcare than before, they continue to
face structural, social and economic barriers to paid employment. That limits women’s individual
economic advancement and constrains India’s social and economic progress. Women’s potential
remains as an untapped resource in the country. Despite significant strides, India’s growth story has
ignored women. The World Bank estimates that 75% of working-age women (35% of India’s working-
age population) currently do not have paid work. Only 59% of women have access to mobile phones,
with an abysmally low internet penetration rate of 19%, and only 35% of women actively use their
bank accounts, further limiting their opportunities. Finally, although women represent 42% of the
agricultural labour force in India, women own just 2% of farmland.

What is Female Labor Force Participation?

 Those who worked for pay or profit for a minimum number of hours in a reference period
 Those who were unemployed but actively looking for such work
 Those who produced services for their own use (e.g., care and household services) were not
considered part of the labor force, nor was their output counted in the SNA.

Slide 2

Women’s labour force participation rate (LFPR) in India, already among the lowest in the world,
continues to decline. The decline of working women between the ages of 15 and 24 may be partially
attributable to an increased focus on education. However, the secular decline and recent stagnation
in participation rates for women between 25 and 64 is alarming.

Ironically, women who are actively participating in the workforce are 2.9 times more likely than men
to be unemployed. Additionally, as per a 2019 study by the Centre for Monitoring India Economy
(CMIE), women graduates are more than 3.5 times more likely than their male peers to be
unemployed. Overall unemployment in India is 7%, but unemployment among women is 18%. In
addition, unemployment for women with a tertiary education is even worse.

On the Global Gender Gap Index by the World Economic Forum (WEF), India has fallen four places
from 2018, now ranking 112 of 153 countries, largely due to its economic gender gap. In less than 15
years, India has fallen 39 places on the WEF’s economic gender gap, from 110th in 2006 to 149th in
2020. Among its South Asian neighbors, India now has the lowest female labor force participation,
falling behind Pakistan and Afghanistan, which had half of India’s FLFP in 1990.

What is the U-shaped hypothesis?

The U-shaped hypothesis is a stylized description of the relationship between the female labor force
participation rate with economic development, which is typically measured in terms of GDP per
capita. In its basic form, the hypothesis posits that female participation rates are highest in poor
countries, where women are engaged in subsistence activities, and fall in middle-income countries
because of the transition of (mainly) men to industrial jobs. As education levels improve and fertility
rates fall, women are able to join the labor force in response to growing demand in the services
sector. This is a stylized fact, but it is not robust to different data sets and econometric
methodologies. While some countries follow this path, many labor markets do not exhibit this U-
shaped relationship.
Theories of human capital would suggest that with more education, women acquire greater skills
and their earnings increase, resulting in higher labor force participation. However, it has been long
known that in India, women’s education has a U-shaped relationship with labor force participation.

 Part of the decline at moderate levels of education may be due to an income effect whereby
women with more education marry into richer families that enable them to withdraw from
the labor force
 a lack of suitable employment opportunities for moderately educated women.
 importance of occupational sex segregation, which excludes moderately educated Indian
women from clerical and sales jobs.
Women from the higher castes tend to face greater restrictions on their mobility. However,
women from families of the middle and lower castes with improved social standing also
prefer to stay at home as an effort at “Sanskritization”.