Women labor force in the light of Nobel

This year, only one person has received the Nobel Prize in Economics – Harvard University Professor Claudia Goldin. She is the third woman to receive the Nobel Economics Prize and the first woman to win this award alone. The Nobel citation mentions her five decades of work and says that ‘the prize has been given to her for increasing our understanding of the women’s labor market’. Information about many of his important contributions has now become common, and their discussion is necessary. Her most extensive study is about women’s labor participation and its consequences over more than 200 years of American history. Many of his conclusions drawn from American data are applicable to other countries as well, including India.

As any economy grows, women’s recovery is U-shaped. With economic development, the dominance of agriculture, first industries and finally the service sector, increases in the economy. In the agricultural era, women work in the fields along with men. In the industrial stage, work becomes more tied, and one has to be a part of the production process in factories, due to which the participation of women decreases. With economic progress, the dominance of the service sector increases, and women are again able to contribute in large numbers. This is a U-shaped contribution, in which the share is high in the initial phase, then declines and then becomes high again as prosperity approaches. This was seen for a long time in America’s economic history. The same example was seen in other countries also, which are currently at different stages of development. In this way, this pattern applies beyond the limits of time and place.

So it should not be surprising that in most rich countries, the service sector is very large, and hence the female labor participation rate (FLFPR) is also high there. This can be up to 85 percent, and in the case of countries like Sweden, up to 90 percent. This rate means that 90 percent of women of working age are either earning income from employment, or are looking for work. This rate is low in India. According to some reports it is less than 20 percent, and is the lowest among G-20 countries. Well, there has been controversy regarding this. In this year’s Economic Survey of the Government of India, it has been stated as 27.7 percent.

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Another aspect of the U-shaped share of female labor comes from family income and social norms. In very poor families, the house cannot run if women do not work. Therefore the share of female labor will be higher. As family income increases, women take a step back and start taking care of the house and children. The share of female labor begins to increase again in rich and ultra-rich households. That means this also happens in U-shape, but on the basis of family income. Social customs also affect this pattern. If a woman works outside the home, a stigma comes with it. It is believed that the ‘man’ of the house is either lazy or not able to earn enough for the family. This belief has been seen in every society and culture. So, perhaps due to social stigma, women in middle class families are not able to participate in work. Another factor added to the U-shaped share pattern is women’s education. Illiterate or less educated women participate more in labour. The share of women who have some education (up to middle class) decreases. The share of women with higher education (college or PG degree) increases again.

This is also U-shaped. This is visible in the context of India. But, this is not due to supply of labour, that is, it is not that women educated till middle class do not want to work. This happens because of the demand side of labour. There are not enough and suitable jobs for women educated till high school and middle school. In such a situation, they have no other option but not to work. We often hear such comments as ‘My daughter is doing temporary work, but will leave as soon as she gets married’. It seems as if a job is just a temporary job before marriage and motherhood. Goldin and others have shown in their studies how in the old days, about 60 percent of adult women’s working age was spent either getting pregnant or taking care of children. If we look at the generation of our grandparents, we will find dozens of their brothers and sisters. Imagine what would be the condition of their mothers. This situation has changed due to family planning and delay in marriage etc. There has also been a sharp decline in the childbearing rate of women. Goldin’s work also mentions the special contribution of sterilization in increasing the female labor rate. He also mentioned discrimination at workplaces and women’s struggle for equal pay.

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His winning the Nobel is very timely and relevant for India. Women’s participation in the labor force in India has declined rapidly over the past two decades, although there has been some improvement recently. The Economic Survey mentions the silent rebellion of 12 million self-help groups active across the country, which are almost entirely run by women. The recent progress made on women’s reservation in Parliament and Legislative Assemblies was also very important. The effect of reservation is also visible at the Panchayat level. At present it is very important to remove two differences. First, the gap in male and female labor participation should be reduced. Second, the pay gap between men and women for the same work should be eliminated. If these two things are done, there will be a tremendous jump in India’s GDP. Goldin’s award has brought these issues into focus.

(These are the personal views of the author)

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