The long-lasting practice of wage gap against female labour forces in the Indian labour market has been dealt with in this paper by the help of building up a general equilibrium framework along with capturing the issue by econometric analysis. It is the women labour force associated with informal sector as casual labour who suffer the most from this problem. The recent statistics even show a falling trend of female labour force participation in these sectors also. Our study traces through the causes behind such wage discrimination and the possible ways of coming out of it. We have found that investment in female human capital development actually helps women to forego present employment opportunities in low-skilled, low-wage sectors, rather encourages the to be more productive and efficient by means of more human capital and enter the labour market in future with no such wage discrimination, in practice. Such trends, observed in India actually glorifies the success of several Government Policies, such as “Beti Bachao Beti Padhao”, implemented for female human capital development. Falling trend of female labour force in informal economy is actually enabling them to enter the formal economy at par with their male counterparts. Our theoretical findings have been supported by our econometric analysis based on the application of Oaxaca-Blinder model and PLFS unit level data of 2021-22. It suggests the higher women are educated as well as skilled, the lower is wage gap they face and more equal is the pay-structure even in the informal economy. Hence, it is the success of government policies directed for development of human capital in women that we have started to observe. The study strongly recommends implementation of many more such women-centric programme that would strengthen the women socially as well as ensure equality for them at the workplaces.

Highlights

• This paper focuses on the existing gender-based wage gap in Indian Labour market.
• This paper focuses on the falling trends of female labour force participation in India, especially in the unorganised; informal sector.
• The paper applies general equilibrium model and captures the issue of gender-based wage gap as well as falling women labour force participation ratio and brings out the importance and success of Governments’ policies that enables women to be more skilled and productive and allows them to forego present discriminated, low-wage employment.