Intl. Conference on Economics, Finance & Business, Paris

WITHDRAWAL OF MFA : A BOON OR CURSE FOR THE FEMALE LABOUR FORCE IN INDIA?

ARATRIKA ROY CHOWDHURY

Abstract:

Women labor force participation is a key driver in the relationship between Economic growth and Employment generation in any country. The 20th century saw a radical increase in the number of women participating in the labor markets across many countries. Albeit growth in labor force participation among the women began at different points in time, and proceeded at different rates, the substantial and sustained increase in most countries remains a striking feature of sweeping economic and social changes over the last century. However, despite commensurate social and legal adaptations across the board, labor force participation among women in India remains remarkably low. Over the last quarter century, casual observations on the basis of the National Sample Survey (NSSO, GoI) databases suggests that, the female labor force participation rate (FLFPR) further declined from 33% in rural India and 16.5% in urban India in 1993-94 to 25.5% and 15.5 % respectively, in the year 2011-12. Periodic Labor Force Supply (PLFS) data of 2017-18 shows that FLFPR in Rural and Urban India have fallen abysmally to 18.2% while the urban participation increased marginally to 15.9%. The observed patterns duly call for deep and rigorous analyses in view of restoring and improving upon the participation rate, not only in view of the extant economic losses associated with low labor turnout, but also because of future sustainability of the growth rate. A candidate set of factors like the increase in the time spent on education, lower fertility rates and increase in household income do not adequately explain the declining trend in FLFPR in India. Indeed, a number of endogenous and exogenous factors contribute to the overall outcome in FLFPR, which I intend to examine and validate as part of my ongoing research on the subject matter. The end of MFA in 2005 was thought to change international trade significantly and lead to a reshaping of the sectors worldwide which would have long lasting impact on employment status in developing countries especially India. Note that, textile and clothing is a women intensive commodity and any adverse shock on its output might render millions jobless, especially when it employs close to 30 million workers in India with overwhelming proportion of that being female. Therefore, the study aims to probe into: a. The withdrawal of MFA provides a natural experiment on the employment outcomes of women in India. We do not claim that this is the sole effect, but in terms of magnitude and the hysteresis it creates on the employment levels, we expect that the cessation year for MFA shall explain FLFPR in subsequent years. We argue that the impact is different for the organized vis-à-vis the unorganized sector. In this vein, we wish to estimate the impact of trade policy on employment and FLFPR across both categories, while controlling for relevant factors. An empirical analysis of the NSSO data on Employment and Unemployment status in India from 1993-94 till 2011-12 would be considered to answer the research questions thus established.

Keywords: MFA, FLFPR, India