Missing women in India's labour force
Over the past seven years, India has strongly economically implemented a minimum-wage regime via MGNREGA: We hypothesise that this may have driven rural women out of the workforce leading to “jobless growth”. Basic economics tells us that an artificial floor or cap on prices leads to the misallocation of resources: minimum-wage regulations drive out workers from the labour market whose productivity is below the wage. Skill development is the key to making the labour force productive.
In two of our earlier notes dated July 10, 2012, and June 27, 2011, we had asked the question “Where have all the girls gone?” Both the NSSO and the Labour Bureau surveys pointed out the low or declining labour force participation of women especially in rural India (see table). Our earlier notes only pointed out these trends as there was no clarity on why women were dropping out of the workforce. Some experts thought women may have started spending more time on education and skill development, or the data collection itself may have been faulty.
Our calculations suggested that the declining labour force participation ratio, when juxtaposed with the population, shows that almost no employment opportunities were generated in India in the five years to FY10. Breaking up this data shows that while men found more employment opportunities, women lost out—especially in rural India. The dropping out of women from the workforce has meant that at an all-India level almost no new jobs emerged.
Across many agricultural activities,
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