COVID-19, Income Shocks, and Women’s Employment in India

Abstract

Existing evidence shows that the COVID-19 pandemic led to larger employment losses for working women in India. This article examines the heterogeneity that underlies these trends by studying the impact of income shocks due to the COVID-19 induced national lockdown (April–May 2020) on women’s employment. Using individual-level panel data and a difference-in-differences strategy that exploits the imposition of the lockdown and accounts for seasonal employment trends, the study finds that women in households facing a hundred percent reduction in men’s income during the lockdown were 1.57 pp (27 percent) more likely to take up work after restrictions eased (June–August 2020). These results are predominant in poorer and less educated households. However, these positive employment trends are largely transitory as the effect on women’s employment reduces to 13 percent in these households during September–December 2020. These findings underscore the use of women’s labor as insurance during low-income periods by poorer households. HIGHLIGHTS Women’s labor acts as insurance during periods of men’s income loss. The increase in labor market participation is only observed for married women. Rural women participate in less-secure casual agricultural labor. Urban women access more secure fixed-wage work and self-employment. Increase in women’s labor force participation is mostly transitory.