This dissertation will explore how gender wage gap and political capacity represented by relative political extraction affect change in economic growth rate of a country. The main argument of the study is that gender wage gap is affecting the labor market by discouraging productive female labor force from entering the labor market. This in turn affects the efficiency and productivity of the labor market reflected in negative economic growth or economic growth potential being compromised. Here the case of Indian economy is examined. The important policy implication of this study is that it could account for the wage differential between genders and it could show how economies are missing out on the labor productivity and in turn negatively affecting the rate of economic growth.

Various sociological literatures have dealt in depth with the gender wage gap and its effect on the socio-cultural fabric of a society (Lips, 2012; Ochsenfeld, 2014; Alksnis and etal, 2008). While the current study recognizes existence of extensive sociological theories on gender wage gap, the focus is on the economic impact of gender wage gap on the growth rate change of a country. The argument is that gender wage gap negatively affects the economic growth rate change.

Economic growth literature have proved beyond doubt that economic and political factor together contribute to the economic growth of a country. Political variables such as political capacity reflects the efficiency of the government in resource extraction, its reach and allocation of those resources extracted. Such an efficient government provides the necessary environment for the economic growth. However, this political variable alone is not enough to increase economic growth of an economy. Rather governments must also possess the economic tools necessary, such as capital stock, human labor and labor force.

These economic and political variable together can contribute towards an increase economic growth. How these political and economic factors combine to achieve economic growth of a country? Hence this study looks at both the economic and political variables in a model to see how they affect economic growth. This research is in the context of Indian economy.