Table 6: Impact of tradable services on consumption expenditure

||(1)|(2)|(3)|(4)|(5)|(6)|
|---|---|---|---|---|---|---|
||Education|Medical|Entertainment|Consumer|Total Services|MPCE|
|Log of tradable services|0.360***|0.114|0.532***|0.257***|0.287***|0.149***|
||(0.0793)|(0.105)|(0.107)|(0.0859)|(0.0764)|(0.0300)|
|Education|0.0268***|0.00712|-0.00774|0.0115*|0.0173***|0.00469**|
||(0.00605)|(0.00808)|(0.00742)|(0.00631)|(0.00561)|(0.00213)|
|Observations|330,915|330,915|330,915|330,915|330,915|330,915|
|State FE|yes|yes|yes|yes|yes|yes|
|Year FE|yes|yes|yes|yes|yes|yes|

*** ** * Standard errors (in parentheses) are clustered at the district level. _p <_ 0.01, _p <_ 0.05, _p <_ 0.1. Source: NSSO EC 1999-2012. Includes controls at household level for owning land (to proxy wealth) and household size, to normalize expenditures per person. Dependent variables and land owned are transformed using the inverse hyperbolic sine function. Observations are weighted by the sample multiplier. Education expenditure comprises library charges, tuition and related fees, private tutor/coaching and other educational expenses. Medical expenditure includes all medical expenditure, except medicine. Entertainment expense includes i) cinema and theatre, ii) mela, fair, picnic, iii) club fees, iv) goods for recreation and hobbies, v) photography and vi) other entertainment. Consumer services are comprised of i) domestic servant, cooks sweeper, ii) barber, beautician and related, iii) washerman, laundry, ironing, iv) tailor, v) priest, vi) legal expenses, vii) postage telegram, viii) telephone charges ix) repair charges for non-durables and other consumer services excluding conveyance. Total services are the total of education, medical, entertainment and consumer services.

# **3.3 Heterogeneous Effects**

Women’s labor force participation may have benefited disproportionately from structural transformation into the services sector. On the one hand, this is attributable to their comparative disadvantage in performing manual labor-intensive tasks associated with the manufacturing sector.<sup>3</sup> On the other hand, large numbers of women in developing economies are employed in non-traded services, such as teaching, residential care, social work, nursing, and personal services, and may have gained through increased consumer demand resulting from the growth in tradable services (as we showed earlier). Therefore, analyzing the heterogeneous effects of the growth in non-tradable services by gender is critical, especially in the Indian setting where women face substantial barriers to labor force participation (Chiplunkar and Goldberg, 2021).

> 3For example, Pitt et al. (2012) show that men in Bangladesh obtain less schooling and sort into production occupations with lower returns to skill (and higher rewards for brawn), while the average payoffs to schooling are higher for women who specialize in skill-intensive activities. Similarly, Munshi and Rosenzweig (2006) find that lower-caste networks in India continue to channel boys into local language schools that lead to traditional blue-collar occupations, while lower-caste girls who did not benefit from these networks owing to low labor market participation rates switched rapidly to English schools that have become more widespread. Juhn et al. (2013) find that the adoption of computerized production processes – induced by trade liberalization associated with the North American Free Trade Agreement (NAFTA) – among Mexican establishments raised the relative wage and employment of women by lowering the need for physically demanding skills.

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