Centre for Development Economics
Department of Economics
Delhi School of Economics
ANNOUNCE A SEMINAR
by
(Shiv Nadar Institution of Eminence)
Aakash Dev
(Thursday, November 7, 2024, at 3:30 PM IST )
Venue: Amex Room
Abstract:-
What prevents people from entering the job market, particularly in emerging economies with few social security benefits? It is important to understand this, especially in the context of India, where around 49% of the working-age population are out of labor force. Among women, about 75% are out of the labor force. We complement existing literature on low labor force participation by looking at how the interaction of the macroeconomic environment with the intra-household disparities in time spent on household work can explain this. We use a rich panel dataset, the Consumer Pyramids Household Survey (CPHS) from the Centre for Monitoring Indian Economy (CMIE), to track labor flow movements periodically and estimate transition probabilities between employment, unemployment, and outside the labor force. These probabilities encapsulate the macroeconomic environment. We develop a continuous-time joint decision household search model and calibrate it to the Indian data. We find that the two factors – (i) the macroeconomic environment and (ii) the intra-household difference in time spent on household work, considered individually cannot explain the large share of out-of-labor force population and the associated gender disparities. However, a combination of both can explain the data well. We do counterfactual exercises to show how varying macroeconomic environments and intra-household time use impact the decision to enter the labor force. We conclude the paper by demonstrating how a more dynamic labor market with a high probability of finding and losing jobs raises labor market participation.