What determines women's labour force participation in India?
This study has been authored by Ruchika Chaudhary.
Women’s participation in India’s labour force has been steadily declining since 1993-94 and India has one of the lowest female labour force participation rates among developing countries. Despite decades of policies and programmes aimed at addressing this issue, the figure has remained consistently low. It is alarming to note that women have been continuously dropping out of the labour market since the mid-2000s. Their participation has been declining despite rising Gross Domestic Product (GDP), increasing educational attainment, rising household incomes, and declining fertility.
Utilising household-level data of Periodic Labour Force Surveys (PLFS) (covering the years 2017-18 and 2018-19), and NSSO’s Employment-Unemployment Surveys (EUS) (various rounds completed in 1993-94, 1999-00, 2004-5, 2009-10, 2011-12), this paper provides systematic evidence on the country’s gender gaps in employment and labour market outcomes.
Since multiple factors influence their decision to undertake the paid market work, this paper tries to unpack the critical aspects of low female labour force participation in rural and urban India. We find that women have notably lower employment rates than men, even though their enrollment in schools and colleges has risen. We witness a U-shaped relationship between education and women’s labour force participation, which is strongly evident in the case of urban women. Women perform a disproportionate amount of unpaid care work and domestic work and face multiple constraints in society, limiting their mobility and labour market choice, forcing them to take non-wage employment or remain out of the labour force.
Demographic and regional trends
The study shows that the primary driver behind this decline has come from rural areas, with participation dropping by 24 percentage points since 1993-1994. By contrast, the participation of urban women during this period saw only a marginal decline, from 25% to 22.5%.
The precipitous drop in the employment levels of rural women has been a major factor contributing to the decline of India’s female labour force participation rate (FLFPR). Rural women’s participation declined across all states during 2011-12 and 2018-19. A number of factors explain this phenomenon, including decreasing employment opportunities for women in rural areas.
The NSSO’s data (1993-94 and 2011-12) also highlights that this decline is not limited to young women workers and that women’s participation has decreased substantially across all age-cohorts. This is especially true of those aged between 25 and 59, including India’s young women - the demographic dividend that is expected to join and remain in the workforce.
Overall, the long-term trends from 1993 onwards suggest that women across both urban and rural areas have been increasingly contributing to domestic duties. Although these activities have large economic benefits not only for the households, but also the economy, this work often goes overlooked, undervalued and underreported.
Social identities and labour force participation
The female rural labour market has always been distinguished by the high participation levels of women from Scheduled Caste (SC) and Scheduled Tribe (ST) communities. Across rural areas, these two demographic groups typically comprise the major share of the female labour force. In particular, women from ST or Adivasi communities show the highest participation rates among all social groups, closely followed by SC or Dalit women. This is attributed to generally high household poverty levels among these categories, and higher mobility and fewer restrictions on working, particularly for occupations that require manual labour.
Although a decline in labour force participation has been witnessed across all social groups since 2004, the highest drop has been registered for ST women, followed by SC groups and Other Backwards Classes (OBCs) in rural areas. This trend has carried over into urban areas as well, with ST women once again experiencing the highest decline in this period. These changes stem from factors such as labour market discrimination, skill mismatch, lack of adequate jobs, and employer bias against women from marginalised sections of the society.
Sectoral employment trends
The period between 2011 and 2019 has seen the percentage of female labour in the agricultural sector fall from 62% to 54.7%. The percentage of women employed in industrial work during this period also saw a marginal decline, from 19.9% to 19%. Although the same period also saw the share of women workers in the services sector rise significantly, this growth has largely been confined to urban areas.
Thirty per cent of women in rural India are performing low-skilled occupations, compared to 19% in urban areas. Within the agricultural sector, over 71% of women are engaged in low productive activities.
The occupational structure of women’s workforce shows that most women continue to undertake marginal and vulnerable jobs, and that more than half work as self-employed. Of those who are engaged in self-employment, most are unpaid helpers and contributing family workers.
Determinants of women’s labour force participation
A multivariate analysis of the odds of a woman working in 2018-19 enables determination of several critical factors that significantly affect women’s participation in the labour force. The first is that higher household incomes are negatively linked to the labour force participation of women in both urban and rural areas. As the household’s income levels increase, the likelihood of a woman being in the labour force decreases. A similar relationship has been noted between women’s LFPR and the household head’s education, suggesting that women withdraw from the labour force once the household’s socio-economic status improves.
Women’s own education is a major determinant of their labour force participation rate. There is a clear U-shaped relationship between female labour force participation rate and education. While women with no or primary education work more than those with higher secondary schooling, a woman with a graduate and higher degree has more than a 12% chance of being in the labour force in urban areas. Similarly, vocational training of all types raises the probability of labour market participation in both rural and urban areas, with on the job training having the highest effect.
For urban women, marriage reduces the likelihood of their participation in the workforce by 17%. The presence of young children is also associated with lower participation, as women in households with children less than five years of age are less likely to participate in the labour force across rural and urban areas.
The state’s social sector spending positively influences women’s LFPR across rural and urban areas. As such, the South of India has a higher proportion of women in the workforce than other regions in the country.
Finally, social group and religion also play a dominant role in determining women’s paid work participation in India. Both are important correlates of female labour force participation, with SC/ST women and Hindu women being more active in the labour market than Muslim and upper-caste women.
Our findings suggest that policies supporting women’s entry into the labour market, such as vocational and technical skills, can significantly impact increasing their participation and mitigating persistent inequalities in India’s labour market outcomes. The paper underscores the importance of a comprehensive and integrated approach and suggests investing in gender-responsive policies to break down women’s economic engagement barriers.
(This study has been authored by Ruchika Chaudhary)