Households, Frictions, and Gender Gap: A Search Model of Labour Force Participation in India

Households, Frictions, and Gender Gap: A Search Model of Labour Force Participation in India

Partha Chatterjee and Aakash Dev
16 June, 2026

Why do nearly half of working-age adults in India, and three-quarters of women, remain outside the labour force? We address this question using a continuous-time joint household search model calibrated to Indian data. Households pool resources and make employment decisions under gender-asymmetric labour market frictions and unequal home-production responsibilities. Estimated transition rates from the Consumer Pyramids Household Survey reveal a labour market characterised by low job-finding and job-loss rates. We find that women’s reservation wages substantially exceed men’s. Counterfactual decompositions show that household responsibilities explain 45 percent of the gender gap, labour market frictions 35 percent, and interaction effects 20 percent. Reducing uncertainty and women’s household burdens significantly increases labour force participation.

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