A Segmentation-based Determination of Factors Influencing Women’s Labour Force Participation

Abstract

With respect to academic research, women’s labour force participation (LFP) has received steady and considerable attention in developed countries. But in the Indian context, this topic had not seen enough research work until recently. Of late, successive governments in India have been focusing on this important macroeconomic indicator. However, the limitation of most of the studies so far is that they have considered the country as a whole or combined data pertaining to the female and male populations. We note that it is essential to segregate and focus on research on females. Also, considering the vast diversity within India, it is untenable to generalise across geographical territories. Hence, we narrow the scope of our study down to one state, viz. Maharashtra. Further, this paper recognises that even within Maharashtra, there are disparities among different regions and to address this, we introduce a new variable called ‘region’. We use data available from the National Sample Survey Office (NSSO) 68th Round for analysis. Drawing on similar research in this area, we build a Probit model for analysis, since the dependent variable (labour force participation) is binary. This paper offers two competing Probit models. The first model takes into account the joint impact of 7 variables – sub round, sector, gender, region, relation to the household head, religion and education level. But, past literature suggests that for women, the marital status and the social group have a major influence on participation in economic activities. Hence, the second model includes these factors. It consists 54 micro segments, based on all possible combinations using the values of four variables – sector, marital status, social group and education level. Such a micro segmented approach helps to identify the likelihood of LFP corresponding to various sub-segments of women. The results show that whether in the rural sector or the urban sector, studying only up to the school level reduces the participation in economic activities of single women. Additionally, in the urban sector, married women who have studied only up to the school level are less likely to enter the labour force.