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Labour Market Dynamics and Worker Flows in India: Impact of Covid-19

Author

Listed:
  • Partha Chatterjee

    (Shiv Nadar University)

  • Aakash Dev

    (Shiv Nadar University)

Abstract

Tracking and analyzing the labour market dynamics at regular, frequent intervals is critical. However, this was not possible for India, a large emerging economy with a significant population undergoing demographic transition, due to a paucity of data. We use the new dataset Centre for Monitoring Indian Economy (CMIE)—Consumer Pyramids Household Survey (CPHS) and use a panel to create Labour Flow Charts and Transition Matrices for India from January 2019 to December 2021. To the best of our knowledge, this is the first time these were created for India. We then use that to look at the impact of Covid-19 on the Indian labour market. We not only look at transitions between employment, unemployment and out of labour force, but also across types of employment—full-time and part-time. The rich data also allows us to consider heterogeneity in the labour market and look at the differential impact of the pandemic across different education groups and gender. From the labour flow charts and transition probabilities, we find that while all groups have been impacted, the magnitude of the impact is different across groups. The recovery is also uneven, and the extent depends on education levels. Further, we do an event study analysis to examine the likelihood of getting a full-time job across different educational and gender groups. Men, on average, enjoy a higher likelihood of getting a full-time job than women. The likelihood coefficients also go up with increasing educational qualifications. Looking at skill heterogeneity, while the likelihood of getting a full-time job either goes down for most groups during the pandemic or the change is minuscule, strikingly it goes up for those with no education, for both men and women. The likelihood coefficients remain elevated for men even after the restrictions are removed, and that for women reverts to the level seen before the pandemic. Finally, this paper provides a way to continuously monitor the dynamics of the labour market as data is released in the regular intervals in the future, which would be of great value for researchers and policymakers alike.

Suggested Citation

  • Partha Chatterjee & Aakash Dev, 2023. "Labour Market Dynamics and Worker Flows in India: Impact of Covid-19," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 66(1), pages 299-327, March.
    • Handle: RePEc:spr:ijlaec:v:66:y:2023:i:1:d:10.1007_s41027-022-00420-7
    DOI: 10.1007/s41027-022-00420-7
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    References listed on IDEAS

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    1. Bussolo,Maurizio & Kotia,Ananya & Sharma,Siddharth, 2021. "Workers at Risk : Panel Data Evidence on the COVID-19 Labor Market Crisis in India," Policy Research Working Paper Series 9584, The World Bank.
    2. World Bank, 2021. "Global Economic Prospects, January 2021," World Bank Publications - Books, The World Bank Group, number 34710, December.
    3. François Gerard & Clément Imbert & Kate Orkin, 2020. "Social protection response to the COVID-19 crisis: options for developing countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(Supplemen), pages 281-296.
    4. Swati Dhingra & Stephen Machin, 2020. "The crisis and job guarantees in urban India," CEP Discussion Papers dp1719, Centre for Economic Performance, LSE.
    5. Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-283, June.
    6. Sangheon Lee & Dorothea Schmidt-Klau & Sher Verick, 2020. "The Labour Market Impacts of the COVID-19: A Global Perspective," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 11-15, October.
    7. World Bank, 2021. "Global Economic Prospects, June 2021," World Bank Publications - Books, The World Bank Group, number 35647, December.
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