Economic Growth and Women's Labour Force Participation in Indian States

Several cross-country and within-country studies have hypothesized that a U-shaped relationship exists between women’s economic activity and economic development. Female labour force participation tends to decline initially with economic development, plateaus at a certain stage of development before rising again. This is argued to be mainly a result of structural shifts in the economy, changing influence of income and substitution effects, and an increase in education levels of women in the population. In this paper we test this U-shaped hypothesis for India using state-level employment data spanning the last twenty five years, 1983-84 and 2009-10. We find no evidence to support the U hypothesis in the Indian context. This finding is especially relevant as researchers attempt to explain the systematic decline in female labour force participation.