The Paradox of Seclusion: Regional Differences in Female Employment and Wages in Urban India

Why are urban gender wage gaps lower in northern than in southern states of India, despite greater gender equality (in non-wage dimensions) in the south? I show that this is due to greater suppression of women’s low-wage employment in the north, resulting in stronger positive selection: selection-corrected gaps that impute wages for the non-employed based on observed and unobserved characteristics are similar for both north and south. I suggest that stronger social norms in the north that stigmatise women’s wage work produce lower employment rates, particularly among less-educated, low-wage women who do not have access to white-collar jobs. These patterns of participation introduce significant selection biases in the measurement of gender wage gaps and help explain why urban gender wage gaps are lower in the north.