Why Did Indian Female Labor Force Participation Decline?: Evidence From a Model of Household Labor Supply

63 Pages Posted: 25 Nov 2018 Last revised: 7 Apr 2020

See all articles by Smriti Bhargava

Smriti Bhargava

Wofford College; Clemson University, College of Business and Behavioral Science, John E. Walker Department of Economics, Students

Date Written: October 15, 2018

Abstract

Between 1983 and 2011, Indian married women's labor force participation (LFP) declined from 35% to 24%, even while the economy grew, educational attainment rose, and fertility fell. To study this decline in LFP, I use India's National Sample Survey to construct a unique sample of matched husband-wife pairs. The economics of household labor supply suggests that the explanation may lie in rising husbands' incomes that exert a negative income effect on wives' LFP. Two-stage least squares estimates of a model of household labor supply reveal positive wives' own-wage elasticities, rising from 0.25 in 1983 to 0.67 in 2011, and negative cross-wage elasticities, "rising" from -0.54 in 1983 to -0.75 in 2011. Estimating the model for the period as a whole, trends in wives' wages imply an increase in women's LFP of 8.6 percentage points, and trends in husbands' wages imply a decrease of 20.8 percentage points, for an overall decline of 12.2 percentage points.

Keywords: Female Labor Supply, Elasticity, Married Women, India

JEL Classification: J22, D13, O10

Suggested Citation

Bhargava, Smriti, Why Did Indian Female Labor Force Participation Decline?: Evidence From a Model of Household Labor Supply (October 15, 2018). Available at SSRN: https://ssrn.com/abstract=3275785 or http://dx.doi.org/10.2139/ssrn.3275785

Smriti Bhargava (Contact Author)

Wofford College ( email )

429 N Church St, Spartanburg, SC 29303
Spartanburg, SC 29303
United States

Clemson University, College of Business and Behavioral Science, John E. Walker Department of Economics, Students ( email )

Clemson, SC 29634
United States

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