Why are fewer married women joining the work force in rural India? A decomposition analysis over two decades

Abstract

In contrast with global trends, India has witnessed a secular decline in women’s employment rates over the past few decades. We investigate this decline in rural areas, where the majority of Indian women reside. Using parametric and semi-parametric decomposition techniques, we show that changes in individual and household attributes fully account for the fall in women’s labor force participation in 1987–1999 and account for more than half of the decline in 1999–2011. Our findings underscore increasing education levels among rural married women and the men in their households as the most prominent attributes contributing to this decline. We provide suggestive evidence that changes in more educated women’s relative returns to home production compared with market production may have adversely affected female labor force participation in rural India.

Appendices

Appendix 1: Definition of labor force participation rate

The National Sample Survey uses three reference periods for the employment survey: (i) 1 year, (ii) 1 week, and (iii) each day of the previous week. This paper employs the Usual Principal and Subsidiary Status (UPSS) definition. The activity status on which a person spent relatively longer time (major time criterion) during the 365 days preceding the date of survey is considered the Usual Principal Activity Status of the person. Persons are first categorized as those in the labor force and those out of the labor force depending on the major time spent during the 365 days preceding the date of survey. For persons belonging to the labor force, the broad activity status of either “working” (employed) or “not working but seeking and/or available for work” (unemployed) is then determined based on the time criterion. After determining the principal status, the economic activity on which a person spent 30 days or more during the reference period of 365 days preceding the date of survey is recorded as the Subsidiary Economic Activity Status of a person. In case of multiple subsidiary economic activities, the major activity and status based on the relatively longer time spent criterion is considered. If a person is defined to be in the labor force in either the principal activity status or the subsidiary activity status then she is defined to be in the labor force according to the UPSS. A woman who reports her primary activity is domestic production is classified as out of the labor force.

Appendix 2: Explaining the role of interactions in the decomposition

The three-way linear Blinder-Oaxaca decomposition for change in mean outcome of employment (Y) between 1999 and 2011 can be written as

${\displaystyle \begin{array}{l}{\overline{Y}}^{1999}-{\overline{Y}}^{2011}\\ {}={X}^{1999}{\beta}^{1999}-{X}^{2011}{\beta}^{2011}\\ {}=\left({X}^{1999}-{X}^{2011}\right){\beta}^{2011}+{X}^{2011}\left({\beta}^{1999}-{\beta}^{2011}\right)+\left({X}^{1999}-{X}^{2011}\right)\left({\beta}^{1999}-{\beta}^{2011}\right)\end{array}}$

Here, the first term is the ceteris paribus effect of a change in characteristics, the second term is the ceteris paribus effect of a change in coefficients, and the third term is the interaction effect between the changing characteristics and the changing coefficients (Biewen 2012). The corresponding non-linear decomposition for the change in mean employment (Y) is

$$ {\displaystyle \begin{array}{l}{\overline{Y}}^{1999}-{\overline{Y}}^{2011}\\ {}=\sum \limits_{i=1}^{N^{1999}}\frac{F\left({\boldsymbol{X}}_i^{1999}{\widehat{\beta}}^{1999}\right)}{N^{1999}}-\sum \limits_{i=1}^{N^{2011}}\frac{F\left({\boldsymbol{X}}_i^{2011}{\widehat{\beta}}^{2011}\right)}{N^{2011}}\\ {}=\left(\sum \limits_{i=1}^{N^{1999}}\frac{F\left({\boldsymbol{X}}_i^{1999}{\widehat{\beta}}^{2011}\right)}{N^{1999}}-\sum \limits_{i=1}^{N^{2011}}\frac{F\left({\boldsymbol{X}}_i^{2011}{\widehat{\beta}}^{2011}\right)}{N^{2011}}\right)\\ {}+\left(\sum \limits_{i=1}^{N^{2011}}\frac{F\left({\boldsymbol{X}}_i^{2011}{\widehat{\beta}}^{1999}\right)}{N^{2011}}-\sum \limits_{i=1}^{N^{2011}}\frac{F\left({\boldsymbol{X}}_i^{2011}{\widehat{\beta}}^{2011}\right)}{N^{2011}}\right)\\ {}+\left[\left(\sum \limits_{i=1}^{N^{1999}}\frac{F\left({\boldsymbol{X}}_i^{1999}{\widehat{\beta}}^{1999}\right)}{N^{1999}}-\sum \limits_{i=1}^{N^{2011}}\frac{F\left({\boldsymbol{X}}_i^{2011}{\widehat{\beta}}^{1999}\right)}{N^{2011}}\right)-\left(\sum \limits_{i=1}^{N^{1999}}\frac{F\left({\boldsymbol{X}}_i^{1999}{\widehat{\beta}}^{2011}\right)}{N^{1999}}-\sum \limits_{i=1}^{N^{2011}}\frac{F\left({\boldsymbol{X}}_i^{2011}{\widehat{\beta}}^{2011}\right)}{N^{2011}}\right)\right]\end{array}} $$

The last term in the square brackets is the interaction effect, which is equal to the explained component at 2011 coefficients subtracted from the explained component at the 1999 coefficients. We show an example of including the interaction term in the decomposition in Table 7 below.

Table 7 Blinder-Oaxaca decomposition of change in women’s LFPR (three way)

Table 8 Blinder-Oaxaca decomposition of change in women’s LFPR with additional controls