Closing Gender Gaps in India: Does Increasing Womens’ Access to Finance Help?

September 28, 2018

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Format: Chicago

Purva Khera. Closing Gender Gaps in India: Does Increasing Womens’ Access to Finance Help?, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Gender gaps in womens’ economic opportunities—labor market and entrepreneurship—have remained high in India. Lack of adequate collateral limits women entrepreneurs’ ability to access formal finance, leaving them to rely on informal sources, constraining their growth. A small-open economy DSGE model is built to investigate the long-run macroeconomic impacts from closing gender gaps in financial access. Results suggest that an increase in women entrepreneurs access to formal credit results in higher female entrepreneurship and employment, which boosts India’s output by 1.6 percent. However, regulations and gender-specific constraints in the labor market limit potential gains as females’ access to quality jobs in the formal sector remains restricted. The paper shows that the factors influencing the number of females are different from those influencing the share of females in formal economic activity. Combining gender-targeted financial inclusion policies with policies that lower constraints on formal sector employment could boost India’s output by 6.8 percent.

Subject: Gender, Gender diversity, Gender inequality, Labor, Labor markets, Self-employment, Women

Keywords: Bargaining power, Bayesian estimation, DSGE, Gender diversity, Gender inequality, Gender wage gap, Global, Hiring cost, Indian economy, Informality, Labor market participant, Labor markets, Male-to-female wage ratio, Market goods, Math display, Open economy, Production function, Self-employment, Substitution effect, Umber o f firms ch oose, Utility function, Women, Women enterprise, Worker employability, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/212
Stock No:

WPIEA2018212
ISBN:

9781484377468
ISSN:

1018-5941

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