Why are educated women less likely to be employed in India? Testing competing hypotheses

In this paper we use the Indian National Sample Survey data for 1993-94 to examine the relationship between women's education and labor force participation. While it has been recognized in the literature that education is associated with lower labor force participation for women in South Asia, the reasons behind this association are less well understood. Two competing theories potentially explain this phenomenon - one based on cultural factors and the other on labor market options. Cultural arguments suggest that women's withdrawal from labor force is associated with improvement in the social status of the family. Higher status families choose to educate their daughters, but at the same time, restrict their independence through labor force withdrawal. In contrast, structural arguments suggest that educated women - like educated men - prefer white collar jobs. Since formal sector jobs only comprise 7 percent of all jobs, opportunities for these desirable jobs is limited, resulting in labor force withdrawal of women. We propose empirical tests to examine whether job availability or patriarchal controls play an important role in shaping this relationship. Our results suggest that cultural factors appear to be less important than lack of employment opportunities.