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Stalled Structural Change Brings an Employment Crisis in India

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  • Santosh Mehrotra

    (University of Bath
    Jawaharlal Nehru University)

  • Jajati K. Parida

    (Central University of Punjab)

Abstract

Using national-level employment data, this paper explores both the supply and demand-side factors responsible for stalling India’s structural transformation on the employment side. We have found that although the overall LF participation has consistently been declining, the size of open unemployment and discouraged LF are rising at an unprecedented pace. This employment crisis arose because of the stalled structural transformation owing to the lack of effective demand for skilled workers in the non-farm sectors. This crisis is not only reflected in stagnant real wages, but it also adversely affected GDP growth and the incidence of poverty. Hence, unless measures are taken quickly, India’s demographic dividend, which ends in 2040, is under severe threat.

Suggested Citation

  • Santosh Mehrotra & Jajati K. Parida, 2021. "Stalled Structural Change Brings an Employment Crisis in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(2), pages 281-308, June.
    • Handle: RePEc:spr:ijlaec:v:64:y:2021:i:2:d:10.1007_s41027-021-00317-x
    DOI: 10.1007/s41027-021-00317-x
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    Cited by:

    1. K. P. Kannan, 2022. "India’s Elusive Quest for Inclusive Development: An Employment Perspective," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(3), pages 579-623, September.
    2. Jian Zhou & Jingjing Deng & Li Li & Shuang Wang, 2023. "The Demographic Dividend or the Education Dividend? Evidence from China’s Economic Growth," Sustainability, MDPI, vol. 15(9), pages 1-17, April.
    3. Balwant Singh Mehta & Ishwar Chandra Awasthi, 2022. "Dynamics of Urban Labour Market and Informality," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(1), pages 19-37, March.
    4. Amit Basole, 2022. "Structural Transformation and Employment Generation in India: Past Performance and the Way Forward," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(2), pages 295-320, June.
    5. Jajati Keshari Parida & S. Madheswaran, 2023. "Harnessing Demographic Dividend Before it is Lost Forever in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 66(1), pages 61-79, March.
    6. Małgorzata Tarczynska-Luniewska & Iwona Bak & Uma Shankar Singh & Guru Ashish Singh, 2022. "Economic Crisis Impact Assessment and Risk Exposure Evaluation of Selected Energy Sector Companies from Bombay Stock Exchange," Energies, MDPI, vol. 15(22), pages 1-25, November.
    7. Shiba Shankar Pattayat & Jajati Keshari Parida & Kirtti Ranjan Paltasingh, 2023. "Gender Wage Gap among Rural Non-farm Sector Employees in India: Evidence from Nationally Representative Survey," Review of Development and Change, , vol. 28(1), pages 22-44, June.
    8. Shiba Shankar Pattayat & Jajati Keshari Parida & I. C. Awasthi, 2022. "Reducing Rural Poverty Through Non-farm Job Creation in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(1), pages 137-160, March.
    9. Santosh Mehrotra, 2022. "Can Asia Assure Social Insurance For All Its Informal Workers?," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 29(2), pages 155-185, November.
    10. Sapna Goel, 2022. "Effect of Deagrarianization at the Household Level on the Scale and Nature of Women’s Work in Rural India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(4), pages 1053-1082, December.

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