Association for Public Policy Analysis & Management

Despite very rapid economic growth in India, in the recent years, there has been a decline in Female Labor Force Participation (FLFP) rates across all age groups and education levels in both rural and urban areas. The FLFP rates in India have declined by almost 8 percentage points between 1990-2000 and 2011-12. The education levels have risen and fertility has decreased simultaneously during this period, adding to the puzzling decline in FLFP. Overall, women in India seem to be withdrawing from the workforce to their traditional role at home as care workers. Therefore, it has become important to study the labor market outcomes of women living in the traditional set up of joint families, where married couples co-reside with the husband’s parents and the patriarchal nature of Indian society leads to a high prevalence of intergenerational co-residence.

This paper studies the impact of co-residing with mother-in-law and father-in-law on woman’s labor force participation. I study this in the Indian context where patrilocality is common and women don’t have much decision-making autonomy especially in the presence of a parent-in-law in the household. On the other hand, for women with young children, having a mother or mother-in-law living nearby might have a positive effect on labor supply because the grandparents might help with childcare. Alternatively, it might have a negative effect on labor supply because the grandparents themselves may require care, and caregiving responsibilities often fall to daughters-in-law who co-reside with them. To ascertain which of these effects predominate requires empirical analysis.

For the study, I use two rounds (2005 & 2011-12) of the panel data from India Human Development Survey (IHDS). To take care of the unobserved differences, I take death of parent-in-law as the exogenous variation. The sample is restricted to those women who live/co-reside with both their mothers-in-law and father-in-law in the first period. Information on whether the mother-in-law and father-in-law are co-residing with the woman in the first round is obtained from the household roster.  Change in FLFP is then studied using death of mother-in-law or father-in-law or both in the second round, as source of variation, taking co-residing with both in the two rounds as the comparison group.

My preliminary results show that co-residence with mother-in-law has a significantly positive effect on women’s labor supply. Losing one’s mother-in-law reduces the labor force participation of women by approximately 5 percentage points in urban areas compared to similar household where the mother-in-law still co-resides in the second round. I also find that death of father-in-law significantly increases woman's labor force participation, by around 11 percentage points.

The analysis has implications for policy as it suggests that policies that increase the availability of childcare to meet irregular or unanticipated child care needs, might substantially increase the labor supply of married women with young children.