Spatial disparity in gender pay gap and female workforce participation: a sub-national level study in Indian manufacturing sector

Purpose - The paper intends to identify the factors that determine the variations in the gender pay gap and female workforce participation at low-skill manufacturing job across Indian states over the time period 2006–2014. Design/methodology/approach - Gender pay gap is measured in two ways: one is scale insensitive and second one is scale sensitive. To construct scale-sensitive gender pay gap measure wage discrimination index is used. For main analysis, a panel framework is used. Fixed effect model and random effect model are estimated along with all relevant diagnostic tests. Findings - Empirical analysis elucidates that male literacy rate, female literacy rate and gender parity index are important factors in explaining the variation in gender pay gap and women workforce participation at sub-national level in India. Female literacy rate significantly reduces the crude pay gap; however, it has insignificant effect on scale-sensitive gender pay gap in low-skill manufacturing sector. Educational enrolment widens up the crude wage gap but narrows down the other one. In case of workforce participation educational attainment and school enrolment both reduce women workforce participation in low-skill manufacturing job. Research limitations/implications - The present research suffers from two major limitations. Due to lack of information, the paper is unable to study the impacts of female representation in trade unions, availability of supporting infrastructure like day-care facilities for working mothers, etc. in explaining the variation in gender pay gap and women workforce participation. The second limitation is that the research fails to address the issue related to selection into employment. The present paper uses the macro-level state-specific statistics instead of micro-level data; hence the imputed wage for unemployed but potential workers cannot be calculated. Originality/value - The paper is unique in the sense that it highlights gender pay gap and female workforce participation issue in low-skill manufacturing sector at Indian sub-national level. There are no such papers that highlight these issues in the context of Indian manufacturing sector. Another contribution is that the present paper considers the scale-sensitive gender pay gap, whose determinants are different than crude gender pay gap.