Women's Employment in India: Insights from PLFS Results.

AuthorShah, Neha
PositionPeriodic Labour Force Survey


Women's employment is an important indicator of level and nature of economic development. It is also an important indicator to measure status of women in the society. Employment not only improves the level of income but also has control over the income. Consequently, living standard and wellbeing of women improves. Improved well-being of women has significant positive externalities on the entire society in terms of improved health and education attainment, and population control. Gender equality in labor participation rates is also estimated to have a strong positive impact on GDP growth (WEF, 2017; IMF, 2013; Goldman, 2013)

Global experience suggests that women's participation in a country's labor force should increase with improvement in human capital indicators, viz. education level, health and economic growth. Better education and health improve productive capacity, raise earning potentials, creating a greater incentive to join the labor force. However, India's growth story is showing a different trend. Women's labor force participation rate is declining for more than last one decade. The Periodic Labor Force Survey for the year 2017-18 indicates that the LFPR of women in the last two rounds of data collection has sharply declined and stands at 23.3 % only. That means about three out of every four women above the age of 15 in India is neither working nor seeking job, which is a historic low level. India's female LFPR is one of the lowest, just above that of nine other countries in the world. Rising gender gap in economic activities is noted by the World Economic Forum's Gender Gap Index. India ranked a low 149th out of 153 countries in terms of economic participation and opportunities, with the index value of 0.354 (WEF, 2020). This is poorer from the 0.385 in 2018. This trend is contradicting the global experience, as India is the only country where the economic gender gap is larger than the political gender gap among 153 countries studied by the World Economic Forum

Emerging Issues

Decline in women's labor force participation rate is widely discussed among academia as well as policy makers since 2011-12, after the 68th round of NSS data showed this trend. Sharma and Saha (2015) analyzed 68th round Employment-Unemployment data of NSSO. They observed that rural women are moving away from the labor force much faster than their urban counterpart. They observe interstate disparities with respect to female WPR for rural and urban females.

Kapso et. al. (2014) argued that India has been adhering to the U-shaped hypothesis that relates national income with FLPR, such that a rise in national income inadvertently leads to a drop in FLPR until it reaches the minimum and then rises again. The study observes the negative impact of increased attendance in education on female labor force participation. They observed that the trend accelerated starting in 2005 and persisted through 2012. They have identified three important reasons responsible for the decline. One is the improved economic condition measured in terms of increased education and higher level of household consumption that explains 18 percent of the total decline. The other two reasons are general lack of employment opportunities for women accounting for 42 percent and changes in measurement methodology between various rounds of survey accounting for 40 percent of the total decline observed in female participation in the labor force between 2005 and 2010.

Das & Desai (2003), argued that there is a strong negative income effect of higher family income as well as strong social effect, as higher caste families encourage female seclusion. So, with a little improvement in the income level of the family, many women seem to prefer to opt out of the labor market. Chatterjee et al. (2018) works out income effect and substitution effect using the India Human Development Surveys (IHDS). Their results confirm a strong negative effect of other family income on women's labor force participation, they again find a U-shaped relationship between women's education and her labor force participation, even after taking into account other family income. The reason for the 'U' shape curve lies in the demand side of the labor market as their analysis shows a sharp rise in women's participation in the salaried jobs with rise in the level of education. So, they argue that if most available jobs were salaried, Indian women would show the usual positive relationship of higher rates of employment with more education. However, such jobs are limited and are accessible mainly with higher levels of education. So, we experience less participation of women with intermediate levels of education.

In order to solve the mystery of decline in women's participation, Ghai (2018) proposes that prevailing social norms and patriarchy hinder the participation of women in the economy despite high levels of education. A...

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