Entry into and Escape from Poverty: The Role of Female Labor Supply in Rural India

Abstract

This paper investigates the factors influencing poverty transitions among rural households. There is a higher likelihood for the poor rural household in escaping poverty and lower likelihood for non-poor households to fall into poverty over time, with the increase in average completed years of education and mean labor hours supplied by female members in the household. However, the contribution of female labor supply and education toward changes in poverty risks is low due to the low-wage cycle prevalent among women. Further, higher maximum educational attainment of households and a higher level of assets ensures a higher probability of escaping poverty and a lower probability of falling into poverty over time. However, there is a higher likelihood for a non-poor household to enter poverty over time and a lower likelihood for a poor household in escaping poverty over time with an increase in dependency ratio and household size. Efforts need to be made to transform a woman’s role from an “income buffering” to an “income generation” role. Women’s economic participation and empowerment are powerful tools for poverty reduction at the household level.