She Works Hard for the Money: Debt Burden and Labour Supply in India

Arnaud Natal and Christophe Jalil Nordman ()
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Arnaud Natal: BSE (University of Bordeaux, CNRS, and INRAE), French Institute of Pondicherry (IFP)
Christophe Jalil Nordman: IRD, LEDa-DIAL (IRD, CNRS, and PSL Research University), France, IFP (Pondicherry, India)

No DT/2025/01, Working Papers from DIAL (Développement, Institutions et Mondialisation)

Abstract: For over 40 years, labour supply has been at the heart of empirical microeconomics, but few studies have examined the impact of household debt burdens on labour supply, and almost none on countries of the Global South. This research fills this gap by examining how debt burden - measured by the debt service ratio - affects labour supply, in particular hours worked, among more than 3200 individuals in rural Tamil Nadu, India, between 2016-17 and 2020-21. Using a Heckman correction with lagged debt ratios and fixed effects to account for unobserved factors and limit reverse causality, the study highlights a striking result: women increase their labour supply to repay household debt, regardless of which household member incurred it. Our results challenge the commonly held view in the South that women’s work is synonymous with empowerment, suggesting that it may be the result of economic pressures rather than a move towards autonomy.

Keywords: Caste; gender; empowerment; labour supply; microcredit (search for similar items in EconPapers)
JEL-codes: D13 G51 J21 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2025-01
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