Document Type

Discussion Paper

Date of Paper

Summer 6-2024


The extent to which women participate in the labor market and have access to formal employment differs greatly across Indian states. In this paper we build on the methodology developed by Hsieh et al. (2019) to estimate the productivity consequences of such differences. Using rich microdata on occupational sorting and earnings, our theory allows to separately identify labor demand distortions (e.g., discrimination in hiring for formal jobs) from labor supply distortions (e.g., frictions that discourage women’s labor force participation. We find that demand distortions are negatively related to state-level economic development, while supply distortions are unrelated to state-level GDP. Equalizing distortions across Indian states could raise state-level productivity by up to 10%.