# **I. Introduction**

It is widely established that women earn less and have lower access to economic opportunities. For instance, women are more likely than men to engage in lower productivity activities, work as unpaid family members, work in the informal sector, and move in and out of the workforce. Since the 1990s, female labor force participation has stagnated globally at around 55%. Most employed women are half as likely to be working full-time, relative to employed men. And when women participate in workforce, they earn 10-30% less than men (World Bank, 2011, 2014, 2016). These gaps are starker in developing countries like India or those in the Middle East but nonetheless are also present in the most advanced nations such as Sweden.<sup>1</sup> Gender discrimination in India, in terms of deprivation of economic opportunities, education or even basic health services, continues amidst the recent modernization of its economy. For example, the World Economic Forum’s (WEF) Gender gap report (2015) ranks India at 108<sup>th</sup> position out of a sample of 145 countries. Although political quotas for women in India have significantly improved their participation in political affairs, nonetheless, these developments are not matched in economic and business spheres where India ranks among the lowest 15 countries in the WEF’s indices on economic participation and opportunity, educational attainment and health and survival.<sup>2</sup> Female participation in the labor force, although rising, is only 29%, as compared to 83% for men. This figure is very low compared to its peers and neighbors such as the Philippines (53%), Nepal (83%) and other advanced countries (e.g., UK, 70%). India desperately needs to unlock this workforce to reach not only sustainable development goals on gender equality, human development, and poverty eradication but also to foster economic growth and shared prosperity.

If gender disparity in India is a result of discriminatory hiring practices in the labor market, then economists, dating back to Gary Becker, would argue that competition should drive out such discrimination.<sup>3</sup> The idea behind this theory is that people prefer to work with their own “types.” In lax environments, or when firms have market power, managers may engage in discriminatory behavior to hire their own “type” and still be able to remain in business. However, competition is thought to put a brake on the scope of discrimination and crony capitalism. If a firm is in a fierce battle for survival, then it must optimize to stay in business, and firms with managers who are willing to give up (or never had) tendencies to discriminate over employees will be more likely to succeed. Evidence from the United States suggests that following deregulations in the banking sector, discrimination within banks and among product markets declined due to greater competition.<sup>4</sup> However, a systematic study on the impact of pro-competitive reforms on gender discrimination and/or segmentation in developing countries is rather scarce.

> 1 See Albrecht, Björklund and Vroman (2003) for evidence on Sweden.

> 2 India ranks among the top 10 countries in the WEF’s political empowerment index, which is one of the pillars of the Gender gap index.

> 3 Becker (1957).

> 4 Black and Strahan (2001) and Levine, Levkov and Rubinstein (2014).

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