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Trends in Female Labour force participation in India: The Role of Demographic Factors.

Rishabh Tyagi, Max Planck Institute for Demographic Research (MPIDR)
Kuriath James

India is experiencing a continuous decline in the Female Labour Force Participation Rate (LFPR) since 2005. The focus here is to understand the role of demographic factors in trends of female LFPR in India. We used the PLFS (2017-18) and NSSO 68th round (2011-12) to assess the role of demographic factors in the decline of female LFPR. We estimated the causal effect of fertility transition on female LFPR in a panel of 35 Indian states formed in 2012 & 2018. We used a 2 Stage Least Square (2SLS) fixed-effect model with son preference of female as an Instrument Variable (IV) to address the endogenous relationship between fertility and female LFPR due to reverse causality. A U-shaped curve is obtained on plotting female LFPR with education level. Widowed and divorced females are more likely to be a part of the labour force than those currently married. We find a significant and positive relationship between fertility and female LFPR in the fixed-effects model and 2SLS fixed effects model with IV. Our claim behind this result is that in the poorer sections, the need to finance the cost of children might lead to a considerable share of Indian women in the labour force.

Keywords: Causal analysis / Causal estimation, Econometrics, Human capital and labour markets, Panel studies

See paper.

  Presented in Session P10.