Association for Public Policy Analysis & Management

Female Employment (FE) is considered as an indicator of growth in most economies. Like any other developing country, it is also an area of major concern in India, in recent times. This study is based on the simple fact that; women in India are customarily viewed as the weaker sex. The fate of a female (as a child and as an adult) rests largely on the two households that she will be a part of, in her entire life. As young girls, they are less likely to be allowed to complete schooling and pursue a higher degree and then to go on to join the labor-force to earn a living. Once married, unlike men, she is again, entitled to stay at home and attend to household chores, take care of children and the elderly and be involved in other such kinds of activities. So, a household, primarily the men in the household, traditionally do not want women to go to school to study or to go to work to earn. These instances are more profound in rural areas of the country.

The author’s belief is that, as a household’s borrowings rise (for purposes including business, hosting cultural functions, buying of assets etc.), women from these same households are sent to work, as a result of the financial distress that the family faces due to the debt.

Two nationally representative unit level data-sets (Indian Household Development Survey & Rural Health Statistics, 2011) have been used in order to explore this relationship. Econometrics techniques such as; Logistic Regression and Control Function Approach, have been adopted to test the causality across different settings (such Income, Caste Categories etc. - Heterogeneity Analyses, Placebo Tests). Results indicate that the impact of Household Debt on FE is significant and positive in case of a Max. Likelihood estimation and are even stronger when we account for endogeneity of Household debt. In line of the stated hypothesis, the author does not find significant impact of Household Debt on Labor supply Decisions of Males as compared to Females. Furthermore, instead of restricting this study at the individual level, the author has also shown that the relationship holds in the region (neighborhood) that a household would belong. Additionally, few policy recommendations have been discussed in the context of the findings.