Low Female Labor Force Participation: In-Depth Analysis

  Oct 28, 2023

Understanding LFPR and Why It's Low for Women: A Comprehensive Review

What is LFPR?

Labor Force Participation Rate (LFPR) refers to the percentage of the working-age population that is either employed or actively seeking employment. It serves as an essential economic indicator, capturing the availability of labor in an economy.

Why is LFPR Low for Women?

Despite strides in education and social awareness, women's LFPR remains significantly lower than men's. Societal norms, educational attainment, family obligations, and workplace biases often serve as obstacles, preventing women from entering or staying in the workforce.

Macro-Implications: Beyond Individual Choices

Low LFPR for women isn't just a personal issue—it carries significant repercussions for household dynamics and overall economic health. Claudia Goldin's Nobel-winning research reveals persistent gender disparities in labor markets.

Declining Trends: Global and National Data

The World Bank's 2022 data shows a declining trend in women's LFPR worldwide, standing at 47.3%. In developing countries like India, the decline is even more alarming, slipping from 28% to 24% between 1990 and 2022.

Economic Theories: Goldin's U-Shaped Pattern

Claudia Goldin posits that women's LFPR shows a U-shaped pattern during economic growth. Initial declines are linked to shifts from household to market production and strong income effects. Eventually, the substitution effect takes over, leading to increased participation. Simplified:Claudia Goldin suggests that as an economy grows, the rate at which women work outside the home first goes down and then goes up, forming a U-shape. Initially, women move from home-based jobs to formal jobs, and because families earn more, some women may stop working. Over time, however, the need and desire to work lead more women to rejoin the workforce.

Marriage as a Barrier

Marriage amplifies the challenges faced by women in labor market participation. Family obligations and societal norms further diminish their LFPR.

Dissecting Societal Factors

Religious and caste affiliations, geographical location, household wealth, and prevailing societal norms can limit or encourage women's participation in the labor force.

Career Choices & Gender Asymmetry

Married women often prefer jobs that offer flexibility and proximity to home. Yet, societal constraints lead to gender disparities in career choices, income levels, and even decisions about fertility.

Statistical Insights and the Indian Context

India's Periodic Labour Force Survey indicates a significant drop in LFPR among married women aged 25 to 49 years, from 50% in 2004-05 to 45% in 2022-23.

Roadmap to Improvement

Improving the quality and accessibility of day-care services, offering secure transportation options, and expanding part-time job opportunities could be effective ways to boost women's LFPR.
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