Gender Differences in Returns to Self-employment in India

This paper provides estimates of returns to education by nature of employment by gender from 1993–94 to 2017–18 and also separates returns from vocational and general education in India. The paper addresses the sample selectivity issue arising from the endogenous choice of employment status in a Mincerian wage earnings equation using the multinomial-selection approach. The study found positive and incremental marginal returns with levels of general education accruing on self-employed workers, both male and female, albeit with a huge gender wage gap. The graduate level of education renders high returns for both male and female self-employed workers. On the other hand, vocational education and training (VET) is found to be beneficial only for self-employed men and not for self-employed women. Given the insignificant returns to VET for women, it is uncertain how women may benefit from the reforms in vocational education brought about through the National Education Policy (NEP) 2020. Unless there is a significant expansion in skilled jobs, no amount of policy reforms towards developing skills of labour force would fructify.