On Her Own Account: Impact of Strengthening Women’s Financial Control

India is an outlier among countries at a similar level of development with its low rate of women in the workforce – an obstacle to economic growth as well as women’s autonomy. The share of women working or looking for work fell from 32 percent in 2005 to 21 percent in 2019. The same trend was observed for men as well during this period, but they continue to vastly outnumber women in India’s workforce. Several studies suggest Covid-19 may have widened this gap.

Conservative social and cultural attitudes around women’s work could be one of the reasons behind the poor representation of women in India’s workforce. The traditional view that women are expected to stay at home while men are the breadwinners of the family is pervasive, many studies have shown. If social norms keep women out of the workforce, then increasing women’s financial control over their earned income may make work more attractive and encourage them to take up jobs. This can even shift views on working women.

A team of researchers led by Erica Field, Rohini Pande, Natalia Rigol, Simone Schaner, and Charity Troyer Moore attempted to test this theory in the central Indian state of Madhya Pradesh. They ran a randomised trial between 2013 and 2016 to examine the impact of giving women more control over their Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) earnings on their willingness to work, their ability to have a greater say in household decisions, and views on working women.

The study was done in partnership with J-PAL South Asia and the Inclusion Economics India Centre at IFMR (formerly EPoD India at IFMR).

Testing the impact of increased financial control

The researchers worked with local banks and the government of Madhya Pradesh in four districts to provide women with their own bank accounts, training to use them, and facilitated direct deposit of wages earned through the MGNREGS.

The MGNREGS is one of the world’s largest rural jobs guarantee programmes and is a major source of employment for women in rural India. Their wages were initially deposited to a common household bank account, almost always owned by a male member of the family. The central government in 2012 mandated that a woman’s MGNREGS wages should be deposited to her personal bank account. Even then, most women in Madhya Pradesh continued to receive their wages in the common household account. For most of the study period, less than a fifth of women in the study districts received wages directly into an account they owned.

The four districts selected for the study had relatively more conservative attitudes on gender roles, as indicated by their skewed sex ratios and low proportion of women who reported being allowed to travel outside their village alone.

In the study sample, only 28% of women stated they have a say in whether they work. Almost a quarter of women, and a third of men, in the study sample agreed with the statement that “women cannot go out to work.” On average, men in the study sample reported that 56% of their community members would think the husband of a working woman is a bad provider.

The researchers identified 197 gram panchayats with banking kiosks for this study, and randomly assigned them to one of the following five groups.

Bank Account: In 32 gram panchayats, women were informed of their eligibility for a free bank account, and that they could set one up during a registration drive at a nearby banking kiosk. They were also provided with assistance in opening bank accounts at these kiosks.

Bank Account and Training: In 33 gram panchayats, women got some training to use their new bank accounts. This was in addition to the help they received in opening their accounts, like the women in the Bank Account group.

Direct Deposit: In 34 gram panchayats, women had the option to have their MGNREGS wages deposited directly into their bank accounts. They were also told about their eligibility to have a free bank account and received help in setting it up.

Direct Deposit and Training: In 34 gram panchayats, women received basic training on running their newly-opened bank accounts, along with all the other features of the direct deposit group.

The main analysis compared the Bank Account group with the other three groups that received combinations of bank accounts, banking training, and direct deposit.

The remaining 64 gram panchayats made up the comparison (or control) group, in which women received no special assistance in either setting up bank accounts or direct transfers of their MGNREGS wages.

The most effective combination

The study findings shine a spotlight on the importance of providing women with control over their own income through personal bank accounts and banking training.

Women in the Direct Deposit and Training group worked more, had greater financial autonomy and expressed more progressive views on gender roles compared with the Bank Account group.

Women in this group were more likely to have worked in the public and private sectors, with private sector earnings increasing by 24%. They also used their bank accounts more frequently and performed the transactions on their own.

The researchers also observed that women in this group were more approving of other women working outside the home for pay as well as of the husbands of working women. In addition, they thought that others in the community would share this view. This liberal outlook may be the result of the woman’s own decision to work more, and learning about the progressive views held by others in the community.

And lastly, evidence suggests men in this group were less likely to perceive that husbands of working women would be judged negatively by the community. Seeing their own wives and other women in the village work, these men may have concluded that the social risks are lower than what they had expected.

These gains were larger among women who had not previously worked under MGNREGS – a group whose husbands had more conservative views on women’s work.

What are the policy lessons?

Conventional social attitudes on gender roles can be a big reason for women's low labour force participation rate and policymakers need to recognise these while designing programmes, the study highlights.

Targeted outreach to women by linking their wages to their individual bank accounts and training them to use them can be effective in increasing their participation in programmes such as the MGNREGS and in the workforce at large.

Moreover, methods such as these also have the potential to relax restrictive gender norms around women’s work – even over a short time horizon – particularly among the most marginalised among them.

The study has been accessed by clicking here.

(The study has been authored by:

- Erica Field, Professor of Economics and Global Health, Duke University

-Rohini Pande, Professor of Economics and Director of Economic Growth Center, Yale University 

Natalia Rigol, Assistant Professor, Harvard Business School

-Simone Schaner, Assistant Professor of Economics, University of Southern California

-Charity Troyer Moore, Director for South Asia Economics Research, MacMillan Center, Yale University )