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Reasons Behind a Declining Female Workforce and Labor Power of India

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Table of Contents

  • Introduction
  • Literature Review
  • Analysis
  • Economic Development and Female Participation Rates
  • Reasons Behind the Low Participation Rates
  • Education Effect

Introduction

India ever since the start of 2000s has experienced declining participation of women in the workforce despite increasing economic growth, in the last few years we have experienced an economic slowdown and the participation of women has gotten even worse. Workforce participation among women in India have long been understood as representing a U shape. Women who might be illiterate at first can start entering the workforce once they get more educated and acquire more skills especially in the service and agriculture sector (Sanghi, 2015). However, while this has theoretical backing it has very less empirical substantiation so this paper seeks to find out whether the U shaped curve actually exists and the reasons behind the declining female workforce. 4 factors have been attributed to this which include the income effect, gender gap, Education effect and also income levels in family these reasons will be looked at in detail in this paper. This paper seeks to also provide policy solutions to increase female labor participation rate as due to these abysmally low rates India is missing out on a lot of potential economic dividends as women are a primary driver of growth in an economy.

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The population of interest is the female workforce and the data used is the employment module on the 68th Indian National Survey (NSS) and ILOSTAT statistics with a regression graph as the main tool to show the relationship between 2 variables education and female labor force participation (FLFP) and a polynomial trend line has been used to show the nature of the relationship, as for reasons behind the declining workforce the paper uses survey data of various studies. Bar graphs and descriptive statistics have also been used in this paper to describe different variables.

Literature Review

The Female labor participation rates in India have long been a topic of study in India owing to the fact that it runs against economic wisdom. The relationship between education rates and participation have long been understood to be in a J shape or U shape but there has been very little research into whether that’s empirically true or not (Sanghi, 2015). There are plenty of economists that suspect whether such a relationship exits at all. However, what is clear is that female labor rates are declining and plenty of reasons have been attributed such as ‘feminization of agriculture’ leaving women in agriculture while men work in the formal or informal sector this takes women out of the workforce (Swarna, 2014) other reasons like education effect, gender gap, income effect have also been studied. If this phenomenon of essentially a ‘missing labor force’ continues then India will not have a lot of economic benefits due to women being a primary driver of economic growth (Vijaya. 2015). For developing countries, normal examples of ladies' work power support are progressively blended, going from as low as 21 percent in the Middle East and North African district to as high as 71 percent in the East Asian and Pacific area in 2010. The sexual orientation holes in labor power support are additionally most noteworthy in the Middle East and North African and South Asian districts, where men's investment rates surpass ladies' rates by more than 50 rate points.1 The work power interest rate (LFPR) in India is around 40 percent, however sex astute, for females it is just 22.5 percent. The hole in male–female work power support is with the end goal that the LFPR for country females of the age bunch more than 15 years is just 35.8 percent, while for provincial guys it is more than twofold at 81.3 percent (Shriddhi, 2013).

Analysis

Female labor force participation rate in India. Neo liberal policy efforts throughout India have led to a declining female participation rate throughout India. In rural sectors women make up only half of the male labor force and in the urban sectors its less than half

This table captures a declining trend in female labor participation rates from 1992 while the male participation has remained relatively stable. There was a slight revival in 2004-2005 but it has since continued to decline till 2012 and the newest data shows that this trend has continued even onto 2019, there are only 9 other countries in the world that have lower rates of participation and due to this fact India can potentially miss out on major economic benefits. Unless we take the necessary steps to mitigate this problem India will continue to face a problem of ‘missing labor force’ or untapped potential. So policy solutions will have to be taken to ensure that these issues don’t deter India’s growth.

Economic Development and Female Participation Rates

Economic theory suggests that the rates would rise with increase in GDP and the relationship between GDP and Participation rates would be of a U shape owing to increasing levels of education among women leading to increased participation of women in the labor force, however the Indian scenario seems to paint a very different picture.

The polynomial trend line only shows a decreasing relationship and as the GDP increases over the years the female labor participation has declined. There was a slight increased observed during 2003-2005 years but largely it’s been a decrease. The R^2 value is 0.8148 which means there is a high significance in the relevance of choosing these too variables. The GDP values have also been logged to prevent errors due to heteroscedasticity. This is very puzzling and researchers have scratched their heads over trying to explain why this is the case. Some of the probable reasons will be explored further.

Reasons Behind the Low Participation Rates

Education Effect

Economic theory says that an increase in education will help women form skills that will help them find more jobs. In India’s case Sarva Siksha Abhiyan helped in raising the education levels however there is no point in analyzing elementary education levels, so literacy levels above the age of 14 have been analyzed instead as education beyond this age is what’s useful in acquiring job skills.

Enrollment ratios have been taken as a proxy for education levels, as the years have gone by the enrollment into schools have increased with only a slight decline being observed during the 2004-05 year, however among women between age 15-24 according to code 91 show us that only 20% of women actually attended higher institutions which means that 80% of women in this age bracket don’t attend institutions also the mean marriage age of women in India is 21 so societal factors might also be playing a role in women being deterred from entering the workforce another component that needs to be noted here is the decrease in fertility rates among women in India so the absence of  

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