ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Structural Transformation and the Gender Earnings Gap in India

Much attention has been focused on the exit of women from the workforce during the high growth period post-2004. However, alongside this exit, the same period also saw a rapid increase in the proportion of salaried workers among those women who continued to remain in the workforce. Simultaneously, education levels have risen rapidly for both men and women. In this paper, we examine the long-run changes in the gender earnings gap among salaried workers in India. We draw on five rounds of the National Sample Survey Office quinquennial Employment–Unemployment Surveys and two rounds of the Periodic Labour Force Survey to show that the raw gender earnings gap has narrowed in this period. But most of this is due to a convergence between male and female earnings in the top two deciles of the earnings distribution. At the bottom, where the proportion of women workers has increased most rapidly, the gap remains high and has grown.

This paper examines the consequences of Indias long-run structural transformation for the malefemale earnings gap among regular wage workers. Since the 1980s, the Indian economy has been on a higher growth path compared to the first few decades post-independence. In particular since the early 2000s, growth has resulted in large-scale transformations in Indias workforce. Education levels have risen rapidly for both male and female workers and the sectoral structure of the economy has changed with a relative as well as absolute decline in agricultural work, and rise in non-agricultural employment.1 The period since 2004 has witnessed two important changes in the nature of female labour supply. First, the overall employment rate (workforce participation rate) for women fell between 2004 and 2019. In 1983, 30% of the female working age population was employed. Between 1983 and 2004, this share was more or less unchanged. However, since 2004, there was a steady decline from 35.5% in 2004 to 19.8% in 201819 after which it increased to 24.6% in 201920, just around the time that the national lockdown was announced in response to the pandemic.2 Second, the proportion of women workers in regular wage or salaried work increased from 8% in 1983 to around 20% in 202223, with most of this increase taking place after 2004.

One of the stylised outcomes of economic development and structural change is a U-shaped relationship between growth and female employment (Goldin 1994; Boserup 1970). In the initial stages of development, womens employment declines as the agricultural sector contracts and suitable work in other sectors have not yet emerged. Then, as the services sector expands and womens educational attainment also increases, women are increasingly more likely to participate in paid employment. In the Indian context, there is mixed evidence on this U-shaped relationship (Klasen and Pieters 2015; Lahoti and Swaminathan 2016).

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Published On : 9th Mar, 2024

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