Household Income Trends in India: Earnings Versus Participation

There has been a consistent increase in the average per capita income of households between 2017-18 and 2023-24. This is seen in both rural and urban areas. We analyse the earnings and workforce participation of individuals at the household level to understand whether the increase in household incomes is due to rising earnings per worker or because of increasing participation by members of the household over the period of study. Our findings suggest that much of the increase in household incomes has come from an increase in individuals participating in the labour market rather than an increase in earnings per worker, an indication of widespread ‘distress’ employment. We examine the trends for both rural and urban households separately, for households across the four quartiles of income distribution, and for male and female workers within households. Our results show that the per capita average household income increased by 18% from 2017-18 to 2023-24, despite only a 2% increase in per worker average household income. This was driven by an 18% increase in workforce participation rate within households over the period. This trend is seen at the all-India level and also across all quartiles of the distribution. The workforce participation among rural households increased by 11 percentage points while the corresponding increase among urban households was only 6 percentage points. Among rural households, the increase was driven largely by women workers – a rise of 20 percentage points. Further, within female workers, the increase is driven largely by their greater participation in self-employment. Across all quartiles, there is a rise in the average number of working individuals within households but at a lower per worker earning over the period of study.