Claudia Goldin’s Nobel is a Wake-up Call for India's Disjointed Labour Markets

India’s FLFPR is one of the lowest in the world and the lowest among the G20 countries at 19.23% .

Claudia Goldin.

(Photo: Chetan Bhakuni/The Quint)

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Claudia Goldin was awarded the Nobel Prize in Economic Sciences on Monday, the third woman to receive the economics prize since the award started in 1969.

The 77-year-old Harvard economist spent decades analysing troves of data to produce research illuminating the history of women’s job-market experiences. 

Here is a good thread that summarizing her work in short.

Goldin’s expansive work portfolio includes pieces on the drivers of female labor-force participation, the origins of the gender pay gap, and hiring biases against women. Her paper, Why Women Won,  which documented the evolution of women’s legal rights, was published this month.

As reported recently, “Around the world, 50% of women have paid jobs, compared with 80% of men, although that gap is smaller in advanced economies. Across the developed economies, women earn 13% less on average and are less likely to play senior roles in the organizations they work for.”

But, the realities for developing country are starkly worse. Look at the Indian scenario, for example. 

India's FLFPR Compared to Other G20 Nations

In research undertaken by the Centre for New Economics Studies’ (CNES’) Swabhimaan and InfoSphere Team, we closely analysed one of the key areas of tabled discussion by India and other G20 members concerning women-led development plans for the group in this year’s deliberation agenda.

To understand how India performs on some of its own ‘gender-performance indicators’, we have looked at the latest data on female labour force participation; care work distribution with households between men-women; the wage gap present, and the nature of entrepreneurship conditions and opportunities made available for ‘women’. 

As an anecdotal caveat, our team acknowledges the use of ‘gender’ as a socially constructed marker, which relates to not just women alone but also other gendered groups (LGBTQ+ communities).

While the overall Female Labour Force Participation Rates (FLFPR) have increased, in the last decade, for G20 countries such as Germany, Saudi Arabia, Russia and Mexico, India’s FLFPR has been declining since 2004.  

India’s FLFPR is one of the lowest in the world and the lowest in the G20 countries at 19.23% as per the World Economic Forum’s Global Gender Gap Report 2022. In contrast, the average FLFPR for the G20 cohort lies at 49.78%.  

Source: Team Swabhimaan 

India’s low FLFPR is unprecedented, considering many usual and unusual factors that keep women from the organised-formal workforce, despite knowing the fact, based on recent NFHS data, that a ‘high fertility ratio’ and ‘low education rates’, are no longer a cause for concern or a deterrent for women’s ability to be part of the organised workforce. The country has seen a reduction in fertility from 4.0 to 2.5 children per woman as per recent data.

Additionally, India has also seen a rise in girls’ enrolment in primary education and has seen female enrolment, for women aged 15-24, in any educational institution, go from 16.1% to 36% (ILO 2014). The change in these factors in the recent decades should correlate to an increase in FLFPR.

However, the opposite is true. As per World Bank estimates, in 2004, India’s FLFPR was 30.2% which fell to 22.9% in 2021. World Economic Forum pegs India’s FLFPR even lower at 19.23% in 2022, in their Global Gender Gap Report 2022. 

Source: Team Swabhimaan 

The Reasons Behind India’s Low FLFPR

The major contributor towards India’s low FLFPR can be traced to women’s contributions towards care work at home. Indian women are responsible for most of the unpaid domestic work in the houses, may it be towards the maintenance of households or taking care of dependent family members. 

According to the International Labour Organisation, Indian women contribute 297 minutes a day towards care work, while men contribute 29 minutes the same. This implies women shoulder the burden of 90.5% of the care work, while only 9.5% is cared for by men.

Furthermore, while on average, even in other G20 countries, women shoulder most of the burden of care work, the distribution of responsibilities is not as skewed. On average, women in other G20 countries account for 70.77% of the care work (Team Swabhimaan).  

Source: Team Swabhimaan 

When it comes to care work distribution, countries in Europe (except Italy), the United Kingdom, the United States, and Canada are the most favourable performers, averaging around 61% of unpaid care work being performed by women.

These countries perform better in this criterion, because their governments choose to invest in social care. Whereas in developing countries, like India, the burden falls heavily on women. This implies that the time that that could be utilised for formal wage-earning labour, they spend on caring for their families, for which they accrue no compensation.

What is interesting is that even when domestic work is outsourced, and domestic help is hired, women are still responsible for ensuring the quality of care. Additionally, even when households hire domestic labour, women of the household find themselves contributing to another form of unpaid care work, rather than joining the workforce.

An ILO-IIHS study on India’s metropolitan cities of Bengaluru and Chennai found that 40% of households hire domestic work to free up time for care for elders and children and 30% of households hire for alleviating the burden of housework. It was found that in only 8.5% of households in Chennai, and 13.5% of households in Bengaluru, domestic help is hired to free up time for paid employment.  

Source: Team Swabhimaan 

Though there are a lot of hurdles when it comes to economic opportunities for women, Indian women are performing well when it comes to entrepreneurship. As per the Global Entrepreneurship Monitor (GEM) 2020/2021 report, the Total Entrepreneurial Activity (TEA) in India is at 14.4%. Out of this, the TEA for men is at 16.3% while that for women is at 12.3%.

Additionally, women in India are reported to have start-up intentions at parity with men and close to the global average (GEM). However, when compared to other economies when it comes to gender equity in entrepreneurship, India still has a long way ahead. The Mastercard Index of Women Entrepreneurs 2021 ranks India at 57th place in 65 countries. 

Source: Team Swabhimaan 

When it comes to entrepreneurship, underlying cultural conditions (unsurprisingly) continue to play a significant role. As per the Mastercard Index of Women Entrepreneurs 2021, women tend to have a lesser inclination towards business ownership and further reluctance to grow the business they own due to a lack of funding.

Some Recommendations for India

The recommendation for India is to work towards increasing enrolment in higher education for women, enhance opportunities for women across different sectors, develop a robust care infrastructure, and increase access to financial resources for women entrepreneurs through direct fiscal interventions i.e. single window clearances, tax breaks, and other measures that can help directly promote women entrepreneurship in the country (Chhabra et al., 2020).

Without leading the discourse through its own example, and illustrating leadership in ‘gender-based performance indicators’ within its own domestic work set up, there is little substance to India’s Vishwaguru projective pivot towards tabling a comprehensive ‘women-led developmental’ policy framework as it envisaged during the G20 declaration deliberations.

There was a strong case for preparing a robust ‘common minimum program’ for all countries, including India, to perform better in the areas highlighted here. Unfortunately, we saw little progress on this.

A radical re-imagination of growth and developmental opportunities offering a wider platform for Indian (and other developing countries’) women (especially those at the margin in the employment landscape) through a greater, more assertive policy can be a starting point for subsequent transformations to happen across other nations too. 

Goldin’s Nobel and her own awarded work which took decades of research provides a tremendous intellectual platform for a wider level of global policy discussion and action on issues of gender wage gap, women and work, and more. 

(Deepanshu Mohan is Professor of Economics and Director, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University. This is an opinion piece and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)