Survey Experiments on Declining Labor Force Participation in India

• In Event: Gender Inequality in South Asia & its Effects on Autonomy, Employment & Turnout

Abstract

According to the International Labour Organisation, female labor force participation (FLFP) in India dropped from 35 percent in 1990 to 27 percent in 2014. The gender gap in labor force participation in 2014 was 53 percentage points, among the worst gender gaps in world, and urban female labor force participation in India has all but stagnated for the last two decades. This has occurred despite rising per capita income, which accelerated in India from the 1990s onward, as well as a significant reduction in fertility rates, which one might reasonably expect to generate higher FLFP. Labor force participation may be "formal" or "informal," given that most labor in India is in informal sectors. Labor force participation may also include entrepreneurship activities, from operating stores and food stalls to trading to those activities undertaken in the home. 
 
The opportunity for women to independently earn money is important because the political economy literature has consistently demonstrated that it dampens gender inequality in the household. This paper, thus, seeks to answer two questions. First, what are the determinants of female labor participation in India? Second, what is the association between independent earnings for women in the household and the extent to which women have weight in household decisions? Relatedly, what is association between independent earnings of women and likelihood of women expressing different social and political preferences from their male counterparts?
 
In order to answer these questions, the paper analyzes novel survey data from 7000 household across the Indian urban clusters of Patna, Bihar and Varanasi, Uttar Pradesh. In each household, the primary wage earner (typically male) and a randomly selected working age woman (ages 18-60) were selected for survey. Crucially, this sort of data allows direct measurement of inequality in decision making, as well as differences in social and political preferences. 
 
In order to ascertain inequality in household behavior, in a unique behavioral experiment, both men and women were asked to reflect on household decision points from everyday tasks like cooking to larger expenditures on appliances and where to send the children to school. Men and women were further asked to describe the extent to which women require permission (and from whom) when leaving the home. Differences in social and political preferences are ascertained by asking both the male and female the same preference questions and tabulating differences at the household level. Our hypothesis is that greater financial independence for women yields less gender inequality in the household and a willingness to offer different social and political preferences from men in the household.
 
Next, in order to understand the factors behind women’s opportunity to independently earn money, we employ a series of survey experiments. Three potential hypotheses are tested as to the extent to which they impact female labor force participation. First, given the social and reputation costs for women to enter the labor market, women may choose to leave the labor force when incomes rise. Second, the increasing number of things that must be tended to at home, women may be increasingly unwilling to leave their household duties. Finally, the physical challenges of commuting in India for a woman, due to safety and poor transport, may be a strong disincentive to enter the labor market. These three constraints are probed using a series of survey experiments to disentangle the precise causes of labor market entry and exit for women, wherein we relax one constraint at a time to determine its relative impact.
 
Preliminary results suggest that there is a strong association between financial independence of women and lower gender inequality in the household along the measures described above. Furthermore, while income effects are noticeable factors in female labor force participation (which has been the primary focus of the political economy literature), preliminary results also suggest that a number of other factors contribute to women being unable or unwilling to join the labor force.
 
This paper contributes to a burgeoning literature on gender inequality and social/political preferences, especially in South Asia. Furthermore, it leverages a unique dataset that can cross-reference the responses of male and female members of a household, a heretofore unavailable type of data for the study of gender inequality in South Asia.

Authors

• Sumitra Badrinathan, University of Pennsylvania

• Neelanjan Sircar, University of Pennsylvania