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Informal Work in India: A Tale of Two Definitions

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  • Rayees Ahmad Sheikh

    (IIT Bombay)

  • Sarthak Gaurav

    (IIT Bombay)

Abstract

Despite growing informality in developing economies, identifying correlates of informality continues to be a challenge due to multiple definitions of informality as well as data limitations. In order to explain the determinants of informality, the authors use two operational definitions of informality, namely ‘informal sector’ and ‘informal employment’, based on enterprise characteristics and employment characteristics, respectively. Using unit-level data from a nationally representative dataset, the authors find that, irrespective of how informality is defined, workers’ education, vocational training and gender play a significant role in determining participation in the informal labour market. The results of this study are robust to correction for selection bias and controlling for regional variations. The findings emphasise the need to restructure skill development programmes to account for the heterogeneity of informal workers.

Suggested Citation

  • Rayees Ahmad Sheikh & Sarthak Gaurav, 2020. "Informal Work in India: A Tale of Two Definitions," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 1105-1127, September.
    • Handle: RePEc:pal:eurjdr:v:32:y:2020:i:4:d:10.1057_s41287-020-00258-z
    DOI: 10.1057/s41287-020-00258-z
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    Cited by:

    1. Leila Gautham, 2022. "It Takes a Village: Childcare and Women's Paid Employment in India," Population and Development Review, The Population Council, Inc., vol. 48(3), pages 795-828, September.
    2. Rayees Ahmad Sheikh & Sarthak Gaurav & Trupti Mishra, 2021. "Race among equals? An inquiry into the segmentation of Indian labor market," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2180-2206, November.
    3. Rajesh Raj Natarajan & Simone Schotte & Kunal Sen, 2020. "Transitions between informal and formal jobs in India: Patterns, correlates, and consequences," WIDER Working Paper Series wp-2020-101, World Institute for Development Economic Research (UNU-WIDER).

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