Empower to prosper: Women, jobs, and growth in South Asia

“Empower to prosper.” It’s a simple but powerful idea. What would happen if women had access to job opportunities and gained more agency? Could this significantly boost growth in South Asia?

Most countries in the region have ambitious development goals. However, even if the current rapid pace of economic growth were sustained, these goals would remain out of reach, at least within the planned timeframes. One possible solution is to harness an important source of the region’s untapped potential: women in the workforce.

In the past few years, several South Asian countries have experienced an increase in female labor force participation. But, as the recently launched October 2024 South Asia Development Update noted, female labor force participation rates remain in the bottom 25 percent of emerging markets and developing economies (EMDEs).

What is the case at the national level, is also the case at the subnational level, based on comparable data for 2015-18. No Indian state saw a female labor force participation rate above 51 percent. Even in highly educated Kerala, the rate stood at just 29 percent. In Sri Lanka, the highest state-level rate was 49 percent, while in Bangladesh it never exceeded 38 percent. Pakistan was at the bottom of the regional ranking, with female labor force participation rates never exceeding 31 percent at the state level. Only in Nepal did female participation rates approach male participation rates, although this is in part due to local differences in measurement that treat some forms of women’s household work as participation.

We conducted a thought experiment in which South Asia’s current rate of labor force participation of women, which stands at 32 percent, reaches that of men, which is 77 percent. In this thought experiment, South Asia’s income per capita would increase by up to 51 percent. This is the equivalent of increasing income per capita from $2,309 to $3,486, or growing the size of regional GDP by nearly $2 trillion.

Figure 1: South Asia’s real GDP, actual and counterfactual with higher female employment (Index, 2022 = 100)

Source: Authors calculations using different analytical approaches. Note: Blue range shows counterfactual model estimates if South Asia’s female employment shares were raised to parity with those for men. Blue line indicates prior GDP data from 2020–2023. Red diamond shows median model estimate

Unfortunately, female labor force participation is not something under the direct control of policy makers. There is no single policy lever that can be pulled to enable women to join the workforce en masse. Achieving such a remarkable expansion of income requires overcoming multiple, often interlocking barriers that have prevented many women from entering labor markets: barriers on the demand side, on the supply side, in legal rights, and in social norms.

The region has undergone decades of structural transformation: a shift toward services, rising urbanization, and increasing openness to international trade. Elsewhere, these processes have created employment opportunities for women. But for South Asia, the verdict is more mixed. 

• Shift towards services. For the region, the rapid change toward a more service-based economy has not been accompanied by greater female employment in services—despite narrowing gender wage gaps in services.
• Urbanization. In South Asia, female labor force participation rates remain 16 percentage points lower in urban areas than in rural areas—despite smaller wage gaps to men. Possibly, the predominance of employment opportunities outside the home in cities creates a more direct clash against conservative norms, in contrast with rural areas where women mainly engage in unpaid work on household enterprises or the family farm, and their work tend to remain within or very close to their homes or farms.
• Trade openness. Only in terms of openness to trade does South Asia resemble other EMDEs: the share of women employed is considerably larger in export industries than in non-tradables industries. 

Figure 2: Difference in gender wage gap (Percentage Points)

Source: Authors calculations on South Asian countries (BGD, IND, LKA, NPL, PAK) in survey rounds covering 1987-2022 available in the harmonized World Bank Global Labor Dataset. Note: Plot shows difference in the gender wage gap calculated as the ratio of female to male average wages, conditioned on education, in urban vs rural areas, services vs. non-services, and export sectors vs. non-tradeable sectors. On average (not shown in the graph) the gender wage gap is about 60%. 

On the supply side, social norms and the legal framework – assessed by the Women Business and the Law (WBL) index of the legal protection of women’s rights – remain binding constraints. The WBL legal index for all South Asian countries is at about or below the bottom quartile of EMDEs. And close to 70 percent of the population in South Asia think women should primarily be homemakers and men breadwinners, although personal attitudes are typically more liberal than perceptions of societal expectations.

The impact on female labor force participation of social norms about gender roles and accompanying mobility restrictions is substantial. Following marriage, women reduce employment by 12 percentage points; this “marriage penalty” emerges and persists even among women without children. At the individual level, restrictive norms explain large variations in women’s work across social groups. At the country-level, restrictive norms are associated with lower female labor force participation rates and weaker implementation of gender-equal laws

Figure 3: Personal beliefs versus social norms, men as breadwinners (Percent of responses)

Source: World Bank-Facebook Survey on Gender Equality at Home. Note: social norms are measured for 120 countries for 2020 (Maldives and Sri Lanka are not available). Social norms comprise social expectations which are beliefs about others’ attitudes, and personal beliefs. In the chart are measured as percentages of agreement about the statement: “Household expenses are the responsibility of the man, even if his wife can help him”. 

In sum, to bring millions of South Asian women into employment will require a wide range of measures. More urbanization and more competitive firms will help create even more job opportunities for women. Yet, barriers on the supply side must also be removed for these opportunities to be taken up. Wage subsidies, digital platforms, and correction of misperception of social expectations have shown promise in boosting women’s employment.

It is very clear that closing gender gaps is important both for equity reasons and also for growth. “Empowering women by employing women can indeed lead to greater prosperity for the South Asia region.