Why has female labor force participation risen in Bangladesh but fallen in India?

Two Indian women working

Bangladesh and India have much in common—in terms of development, geography, and culture. So why has female labor force participation risen in Bangladesh, yet fallen in India?

Figure 1: Female labor force participation

Figure 1: Female labor force participation

Source: World Bank 2022

Globally, female employment tends to fall and then rise with economic development (Figure 2). But India is yet to climb this upward curve; urban female labor market participation remains flat.

Figure 2: Female labor force participation

Figure 2: Female labor force participationSource: World Bank 2022

Both India and Bangladesh are caught in “the Patrilineal Trap”. Female labor force participation remains well below the global average because their meager earnings seldom compensate for men’s loss of honor.

This preference for housewives persists even in modernizing cities (as I learned through qualitative research in Delhi, Rajasthan, Maharashtra, Karnataka, Bengal and Putna). Stay-at-home mothers cook and clean for their sons as a way of expressing love. Men become accustomed to women’s care-work. Cultural preferences help explain South Asian married women’s extremely high volume of housework, which in turn restricts employment.

In Bangladesh, families make strong efforts to restrict female sexuality, autonomy and mobility. Girls are married very early, to ensure virginity. Women who join savings groups or work in garment factories are at heightened risk of domestic violence. Men often try to control women’s earnings. The overwhelming majority believe that men have greater right to a job (see Figure 3). There is no reason to think that female employment has risen in Bangladesh because they are especially supportive of gender equality.

Figure 3: Gender beliefs in South Asia

Figure 4: Gender beliefs in South AsiaSource: World Bank 2022

When Bangladeshis move to the United Kingdom, where there are more economic opportunities, they generally forgo women’s earnings. Only 39 percent of British Bangladeshi and Pakistani women work. Muslim women typically have low rates of employment. British Indian women actually work at high rates: (69 percent, almost converging white British women, 74 percent). Indians thus appear more supportive of female employment.

I suggest that female employment has risen in Bangladesh but fallen in India because its economy generates more jobs. Female earnings are high enough to compensate for men’s loss of honor.

India’s jobless growth

The growth elasticity of employment has been very low in India relative to other countries and over time, as shown by Amit Basole. This translates to weak demand for female labor.

Table 1: Growth elasticity of employment

growth elasticity

Source: Amit Basole 2022

India has seen zero change in the scale of production. Over three-quarters of workers are employed in enterprises with less than ten people. India is also a global outlier in terms of informal share of employment. Although India’s economy has grown, this has only weakly diminished the proportion of people in informal or agricultural employment.

Endemic precarity compounds reliance on kin. Men may be reluctant to reject arranged marriages within their jati.

But why has growth generated so few (formal) jobs in India? And why do so many Indians continue to work in small family firms, where productivity is low? Economic papers on India are divided. They blame either kinship or labor regulations.

Bangladesh has similarly strong reliance on kin, yet has seen far greater formal job-creation. I suggest that Bangladesh’s authoritarian governments have kept labor costs below marginal productivity, motivating business expansion.

Bangladesh’s labor repression

Successive governments have sought to boost export-competitiveness by keeping labor costs low. Strategies include under-staffing labor inspectorates, permitting industry self-regulation, repressing independent labor movements with restrictive legislation and police brutality, while co-opting more acquiescent trade union leaders.

Trade unions were banned in the 1970s under martial law. Even after they were legalized, the registration of unions still required support from 30% of workers in each enterprise, which is difficult to accomplish in large factories. Trade unions are prohibited in export-processing zones (which are also exempted from national labor legislation). Conditions are hardly better outside these zones. Understaffed, uninterested labor ministries seldom sanction abuses. Worker mobilization was outright banned in 2007, during a state of emergency. Subsequent protests were met with police brutality: rubber bullets, tear gas, water cannons, arrests, and torture. Manufacturers also thwart unionism with hired thugs, intimidation, threats, blacklisting, dismissals, and false criminal complaints.

Workers’ fear of violent reprisals may explain extremely low unionization rates. Seldom seeing successful resistance, they underestimate wider support and quietly get on with the job.

By repressing organized labor, governments of Bangladesh have kept labor costs low, probably below marginal productivity. Firms have hired more workers, including women.

In India, by contrast, there are stronger deterrents to business expansion. If firms employ less than ten workers, they need not offer paid leave, pensions, or health insurance. They can terminate workers with no notice or severance pay. The cost of this regulation is compounded by labor inspectors’ extortionary corruption. Establishments that employ more than nine workers pay an additional 35 percent of the wage with every additional worker. To circumvent these costs, employers frequently subcontract work to home-based workers.

As one female business owner in Delhi explained,

“If you downsize, your profits boom. You can avoid all the regulations… The regulations are for the benefit of the employees. Above 10 [‘regular employees’] you have to pay the EPF and health benefits. If we expand, we’d hire contract laborers. Now we’ve downsized, we’re doing REAL BUSINESS!”

The small scale of production in India generates a vicious cycle, explains Professor Amit Basole. India’s economy is especially reliant on domestic demand. But most Indians work in tiny firms and tiny farms, with low productivity. These low-income workers cannot afford modern sector goods. The modern sector thus caters to a narrow stratum of affluent people and is extremely capital intensive. This suppresses job-creation and perpetuates small-scale employment.


Why has female employment risen in Bangladesh but fallen in India?

My answer is simple: Bangladesh’s economy generates more jobs. Rising female earnings increasingly compensate for men’s loss of honor. In India, by contrast, the dearth of formal employment reinforces a vicious cycle of poverty, precarity, familial dependence, jati-endogamy, caste stratification and patriarchy. Since cities offer scarce job opportunities, Dalits struggle to escape rural despotism.

The alternative explanation of this South Asian divergence is that Indians are less supportive of female employment. But this seems unpersuasive given British Indian women far higher rate of work.

Cultural change is clearly possible, but only with job-creating economic growth.