Determinants of Female Labour Force Participation in India: Evidence from Supply Side.

Female labour force participation (FLFP) in India has gone down from 42.74% in 2005 to 24.53% in 2019. This is the case when education levels have gone up and fertility rate has declined. Against this backdrop, this paper studies the low figures of female employment in India. It draws out the determinants of FLFPduring 2005 to 2019 using NSS EUS and PLFS data. With the use of a probit, shapley value decomposition and IV-probit method, the various supply side factors which aid or impede FLFP are brought out. Results from probit regression show that women's age, education levels, marital status, presence of children, household size, and social & income group of the household and occupation type are significant determinants of FLFP. Shapley value decomposition shows that age and education level of women together explain 37% of the variation in rural areas and 51% in urban areas in 2019. Education's contribution to FLFP is the highest in urban areas at 20% in 2019. State level heterogeneity, an indicator of labour demand, also explains about one-fourth of the total variation in FLFP. Further, regression with the use of IV-probit model, to counter the potential endogeneity of household monthly consumption expenditure, reveals presence of negative income effect in 2019. Being married, presence of children and staying in a large household reduces the probability of FLFP. Occupational structure of the household is also a significant factor. The probability of participation rises when a woman belongs to a regular salaried household vis-à-vis the self-employed. Education levels of secondary school and above are significant and positively associated with FLFP. There is also a caste pattern visible with higher probability of participation among the scheduled tribes (ST) and scheduled castes (SC) vis-à-vis other castes. Higher education has a stronger positive effect on FLFP in urban areas while household income, presence of children and being married have a stronger negative effect on rural FLFP. The variation by caste presents effect of social norms though its significance has reduced over the years. Inter-temporal analysis presents that the effect of children and household income levels has reduced over time; however, that has not translated to higher probability of FLFP. This is an indication of demand side issues in FLFP in India. [ABSTRACT FROM AUTHOR]