Marty Harris is an assistant digital editor at the Lowy Institute.

Approximately 862 million women worldwide have the potential to more fully contribute to their national economies, according to a new IMF report on the macroeconomic gains stemming from gender equity in the workforce.

The report outlines a range of policy options to support higher (formal, paid) female labour force participation, with some interesting notes on India:

The female labor force participation rate (FLFPR) in India is low and concentrated in rural areas and the agricultural sector. The FLFPR in urban areas is below 25 percent, and while rural participation rates are almost twice as high as urban rates, they are still lagging significantly behind the world average. Moreover, the FLFPR has been declining over the last 20 years. Among employed women, 85 percent engage in vulnerable employment, including around two thirds who work in the agricultural sector.

The data show a different picture, however, when trends in female school attendance are accounted for. When the Indian urban FLFPR is adjusted for 15 to 59 year-old women attending school, it increases by almost 13 percentage points. Many of these women can be expected to join the labor force in the near future with significantly better employment and earning potential than their less educated peers.

With education on the rise and declining fertility rates, India can reap huge benefits in its demographic transition. With about half of its population below the age of 25 and fertility rates projected to converge to replacement levels in the medium run, India’s age structure is changing favorably, yielding possible demographic dividends of an additional 1 to 2 percentage points of annual growth. While this demographic window itself is transitory, its growth effects can be made permanent by higher investments in education, especially because returns to investments in female education are on average 1 percentage point higher than investments in male education. 

Shrinking the gender gap in education and the FLFPR has the potential to boost India’s per capita income significantly by 2030. Assuming the gender gap is halved by 2017 and cut to one-fourth of its 2008 value in 2027, Lawson (2008) estimates that India’s per capita income could be 10 to 13 percent higher than under the baseline scenario of unchanged gender inequality in 2020 and 2030, respectively.

IMF Managing Director Christine Lagarde is helping to publicise the report, arguing that:

Raising women’s labour-market participation rate boosts economic performance in a number of ways. Higher incomes for women lead to higher household spending on educating girls - a key prerequisite for faster long-term growth. Employment of women on an equal basis with men provides companies with a larger talent pool, potentially increasing creativity, innovation and productivity. And, in advanced countries, a larger female labour force can help to counteract the impact of a shrinking workforce and mitigate the costs of an ageing population.

Photo by Flickr user Flying Cloud.