Pandemic exposure lowered wage aspirations of rural women: World Bank

The exposure to the pandemic lowered the wage aspirations of young women, especially in rural India, which may have decreased their willingness to migrate to urban areas, according to a recent study by the World Bank.

The working paper titled: “The Influence of Covid-19 on Young Women’s Labour Market Aspirations and Expectations in India” found that exposure to the pandemic significantly decreased the “wage aspirations” of young women living in rural areas by 25 per cent after the pandemic.

The authors of the study, S Anukriti, Catalina Herrera-Almanza, and Sophie Ochmann, revealed that the effect on “wage expectations” saw a 13 per cent decline after the pandemic. These changes led to a 90 per cent reduction in the “aspiration gap” among young rural women.

The research was conducted in Haryana on a sample of 3,180 female vocational trainees between June and August 2022.

Wage aspiration means the lowest wage rate at which a worker would be willing to accept a particular type of job, while wage expectation refers to the anticipated wage that a worker believes they will receive in the labour market, based on their understanding of economic conditions.

The wage aspiration gap is defined as the difference between wage aspiration and wage expectation.

The research also studied the effect of a decline in the “aspiration gap” and found the pandemic reduced rural women’s willingness to migrate to urban areas for work by 65 per cent due to greater uncertainty, fear of job loss, lower chances of reintegration, and lack of social security in the event of another pandemic.

The study noted that the negative effect of the pandemic on the aspiration gap is driven by a decline in the share of respondents who have unrealistically high wage aspirations.

“Instead, the pandemic made the aspirations of young rural women more realistic. The decrease in their willingness to migrate is likely to decrease their expected income (and hence their agency) given that migration to urban areas is an important pathway to higher incomes for many rural households,” the study added.

Commenting on the study, Lekha Chakraborty, professor at the National Institute of Public Finance and Policy, said women adjusting to lower wages cannot be interpreted as less aspirational.

“It’s only a ‘transient’ coping mechanism in the post-pandemic labour market. Labour market is dynamic, and post-pandemic fiscal policies have a major role to play as 'employer of last resort' and protect reasonable wages. Post-pandemic, low wages affect the aggregate demand in the economy,” she explained.

MIND THE GAP

- Wage aspirations of young women down by 25% after pandemic

- Wage expectations down by 13% after pandemic

- 90% reduction in the ‘aspiration gap’

- Willingness to migrate to urban areas also decreased