Markets and Spillover Effects of Political Institutions in Promoting Women’s Empowerment: Evidence From India

Abstract

This study presents fresh evidence that market interventions aimed at empowering women are more effective in the presence of formal political institutions, using the case of political reservations for women in Indian local governments. It uses data from 2,423 households in 100 Indian villages and accounts for endogeneity through the instrumental variable method to investigate women engaged in the Indian dairy sector following the implementation of India’s National Dairy Plan, which seeks to connect women with formal retail markets. Results suggest that while markets provide “passive” forms of agency to women, political representation can transition this to “active” forms of agency, allowing women to exhibit purposeful behavior. However, spillover effects of reservations (quotas) do not contribute significantly to women’s intrahousehold agency since they continue to depend on male counterparts for routine and intermittent decisions. Additionally, in community matters, the cumulative effect of reservations is more pronounced than standalone market impacts. HIGHLIGHTS Development interventions aimed at connecting women with labor markets have limited, short-term impacts on women’s agency because the ability of women to influence household decisions often depends on their social backgrounds. While the link between economic empowerment and development is weak, changes in social structures can promote women’s greater participation in decision making. Provisions in India’s 73rd Constitutional Amendment that propose political quotas for women in Indian local governments have helped loosen patriarchal social structures. Funding agencies and development organizations can generate larger and long-term empowerment outcomes for women by mounting market interventions in combination with more gender-inclusive formal political institutions.