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Resilience of the Rural Employment Sector to Economic Shocks in India

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  • Surendran-Padmaja, Subash
  • Anwer, Md. Ejaz
  • Aditya, K.S.

Abstract

The study explores the effect of recent economic shocks due to policy changes and the COVID-19 pandemic on rural employment in India. The study uses three cases; (i) demonetization, (ii) Goods and Service Tax (GST) implementation, and the recent (iii) COVID-19 pandemic to explore the resilience of employment in the rural regions of India. The study used state-level data estimates on rural employment in India provided by CMIE, employment data from NSSO, and migration data from the population census. A modified version of interrupted time series analysis within the beta regression framework was used to quantify the effect of shocks. The study shows that the rural unemployment rates increased after economic shocks as per expectations. The effects were smaller in the case of demonetization but were significantly higher in the case of GST. Early trends suggest a significant short-term effect due to COVID-19-induced shock on unemployment. The study shows that the urban sector is more resilient than the rural sector. The study highlights the need for employment guarantee programmes and direct assistance during the shocks to increase the resilience of the rural economy.

Suggested Citation

  • Surendran-Padmaja, Subash & Anwer, Md. Ejaz & Aditya, K.S., 2023. "Resilience of the Rural Employment Sector to Economic Shocks in India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 0(Number 01), March.
    • Handle: RePEc:ags:inijae:345219
    DOI: 10.22004/ag.econ.345219
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    References listed on IDEAS

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    1. Nidhi Aggarwal & Sudha Narayanan, 2023. "The impact of India's demonetization on domestic agricultural trade," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 316-340, January.
    2. Dagmar Walter, 2020. "Implications of Covid-19 for Labour and Employment in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 47-51, October.
    3. repec:wbk:wbpubs:2693 is not listed on IDEAS
    4. Calzada Olvera, Beatriz & Gonzalez-Sauri, Mario & Moya, David-Alexander Harings & Louvin, Federico, 2022. "Covid-19 in Central America: Firm resilience and policy responses on employment," Journal of Policy Modeling, Elsevier, vol. 44(6), pages 1280-1295.
    5. Silvia Ferrari & Francisco Cribari-Neto, 2004. "Beta Regression for Modelling Rates and Proportions," Journal of Applied Statistics, Taylor & Francis Journals, vol. 31(7), pages 799-815.
    6. Haggblade, Steven & Hazell, Peter & Reardon, Thomas, 2010. "The Rural Non-farm Economy: Prospects for Growth and Poverty Reduction," World Development, Elsevier, vol. 38(10), pages 1429-1441, October.
    7. Gabriel Chodorow-Reich & Gita Gopinath & Prachi Mishra & Abhinav Narayanan, 2020. "Cash and the Economy: Evidence from India’s Demonetization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 57-103.
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