Small-sized firms slowing down employment of women in India

Female participation in India’s workforce is below global standards and one reason for that could be “micro-firms” that employ less than 10 people on average.

Pubali Chakraborty, Assistant Professor of Economics, Bates College; and Kanika Mahajan, Associate Professor of Economics, Ashoka University, have published a paper discussing why larger firms hire more women and maintain a better gender ratio in employment, and how India might be lagging in employing women because of “micro-firms”. 

The paper, titled Does the size of an organisation have any link to the share of women it employs?, examines the hypothesis about bigger firms hiring more women, and found that bigger firms in India would be more likely to employ more women in comparison to other “micro-firms”, with the research finding firms having 20 or more workers 27% more likely to hire more women in comparison to firms that boasted less than six employees.  However, a high proportion of firms (nearly 98%) in the country are micro in nature, hiring fewer than 10 employees, and impeding the number of women employed.

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The research also indicated that women are more likely to be attracted to bigger firms due to the non-wage benefits offered for women, including maternity leave, childcare, transport, paid leaves, and healthcare benefits.  “Larger firms may be better placed to invest in such benefits because they have higher revenues, profits and because it is more cost-effective to provide such services and infrastructure for a bigger worker pool than for a handful of workers. These possibly indicate that bigger firms can attract more women due to these non-wage benefits,” said Chakraborty and Mahajan.