A remarkable paradox of India's recent economic history has been the decline in its female labour force participation rates (LFPR). Some facts. From Mahesh Vyas of CMIE,
Although the labour participation rate for women is very low, at less than 11 per cent compared to 71 per cent for men, they face a much higher unemployment rate of 17 per cent compared to 6 per cent for men... Women accounted for 10.7 per cent of the workforce in 2019-20, but they suffered 13.9 per cent of the job losses in April 2020, the first month of the lockdown shock. By November 2020, men recovered most of their lost jobs, but women were less fortunate: 49 per cent of the job losses by November were of women... In 2019-20, female labour participation rate (FLPR) among urban women was 9.7 per cent against 11.3 per cent among rural women. Both participation rates are very low, but the lower rate among urban women runs against expectations. This is because urban women are expected to be better educated and because urban India is expected to offer them better and more jobs than rural India.
From Mihir Sharma in the context of a comparison with Bangladesh
In India, female labour force participation peaked at 32 per cent of the working-age population in 2005, and has since come down to 21 per cent. (Pre-Taliban Afghanistan had a higher ratio of women to men working than India.) In Bangladesh, the past three decades have seen female labour force participation steadily increase, to its current level of 36 per cent. This is perhaps the biggest difference between India and Bangladesh, just as it is the biggest difference within India between states such as Tamil Nadu, Kerala and Maharashtra, and others, such as Uttar Pradesh, according to the Periodic Labour Force Survey.
The CMIE's definition of LFPR requires people to have been working or actively and recently looking for work, as per which it sank from 16% in 2016 to 11% by end of 2019. In contrast, as per the ILO's more liberal measure of LFPR, the rate fell from 26% in 2010 to less than 21% in 2019. The Economist points to this stark possible foregone output
Largely because of the dismal level of female participation, India’s overall workforce has failed to grow. It was 420m in 2016, and is now just 400m by CMIE's count. It would be around 600m if India had a similar labour participation rate to, say, China or Indonesia.
The conventional wisdom has been to posit the explanation in terms of a U-shaped response of LFPR - as incomes increase the LFPR initially declines as the relative affluence allows households to shed forced women's labour, and then after a certain level of income the LFPR again starts to rise. This was always a questionable rationalisation, given the very low level of LFPR in India even compared to other low income and poor countries elsewhere.
Ashwini Deshpande and Jitendra Singh of Ashoka University have a working paper where they refute the aforesaid conventional wisdom,
Using 12 rounds of a high frequency household panel survey, we demonstrate volatility in Indian women’s labour market engagement, as they exit and (re)enter the labor force multiple times over short period for reasons unrelated to marriage, child-birth, or change in household income. We demonstrate how these frequent transitions exacerbate the issue of measurement of female LFPR... Blinder-Oaxaca decomposition of determinants of female LFPR suggests that none of the total fall (10 percentage points) in our study period is explained by a change in supply-side demographic characteristics. We suggest that frequent transitions, as well as fall in LFPR, are consistent with the demand-side constraints, viz., that women’s participation is falling due unavailability of steady gainful employment. The high unemployment rate and industry-wise composition of total employment provide suggestive evidence that women’s participation is falling as women are likely to be displaced from employment by male workers. We show that women’s employment is likely to suffer more than men’s due to negative economic shocks, as was seen during the fallout of demonetisation of 86 percent of Indian currency in 2016. Our analysis contests the prominent narrative that women are voluntarily dropping out of the labor force due to an increase in household income and conservative social norms. Our results suggest that India needs to focus more on creating jobs for women to retain them in the labor force.
Mahesh Vyas has a nice summary of the paper's findings,
They find that women are keen to work and come to the labour markets in search of work repeatedly even after quitting employment. More than half of the women who were in the labour force at some time made at least two transitions in or out of the labour market over the four-year period of the study from 2016 through 2019. This repeated entry and exit into the labour market over short intervals of time indicates that women are neither shy nor pre-occupied elsewhere to drop out of the labour force for good. Labour market conditions are harder for women. But, this does not deter them from re-entering the labour markets repeatedly after exiting it, in search of jobs.
In this context, an Institute of Fiscal Studies working paper by Rachel Griffiths et al is instructive. It points to how higher female LFPR can, apart from increasing output by adding workers, could also potentially expand output by increasing the production possibilities and spawning new industries.
They analysed food consumption habits in UK households in 1980-2000 period and found,
The share of home-cooked food in the diet of UK households declined from the 1980s. This was contemporaneous with a decline in the market price of ingredients for home cooking relative to ready-to-eat foods. We consider a simple model of food consumption and time use which captures the key driving forces behind these apparently conflicting trends. We show that observed behaviour can be rationalised by the fact that the shadow price of home-cooked food, which accounts for the fact that cooking takes time, has risen relative to the price of ready-to-eat food, due to the increase in the market value of time of secondary earners.
They show that while the relative prices of food ingredients and processed foods have fallen sharply in the period, that of eating out and takeaways have increased sharply.
However, despite this the share of home cooking has declined. As explanation, they point to the rise in the relative shadow prices of home cooked food. In simple terms, the opportunity cost of home cooking became higher as women's labour force participation opportunities and rates increased along with their wages.
The increased opportunity cost made people look for alternatives to home cooking, leading to the emergence of entire food-related industries.
Given the Indian context, increased female LFPR offers several opportunities to expand the economic output. For a start, in a country where the majority of population is employed in agriculture, a very high share of food grains, vegetables and fruits are wasted, and where only a tiny share of those are processed, the promise of market in processed foods is huge. Second, the current market for instant or takeaway food (in the form of push carts serving snacks) and small makeshift roadside eateries is informal and fragmented, and therefore very unproductive. They support owner subsistence instead of creating productive jobs.
Unfortunately, these opportunities can be harnessed only if female LFPR increases. This requires making labour force participation attractive for women. This, in turn, requires the breaking down of social and cultural barriers, growth of economic activities which are more hospitable to women, and for especially the larger businesses to become more receptive to hiring women.
No comments:
Post a Comment