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The Landscape of Self-Employment in India: Trends, Constraints, and Policy Prescriptions

Author

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  • Farzana Afridi

    (Indian Statistical Institute (Delhi)
    IZA (Bonn))

Abstract

This paper assesses the structure and quality of self-employment in India, over several decades. India, historically, has had a much larger share of workers who are self-employed and a smaller proportion of wage and salaried workers. This structure of labour force participation has not shifted much in decades. In recent years, the proportion of self-employed has risen relative to the pre-pandemic era, and much more so for women. At the same time, significant underemployment accompanies low earnings of the self-employed. The paper highlights three key constraints for improving the quality of or transitioning out of self-employment—vocational skilling, access to formal credit and legal support for entrepreneurship. It concludes by discussing the implications of technological change and digitisation for self-employment and the need for reforming the legal framework of self-employment in India.

Suggested Citation

  • Farzana Afridi, 2025. "The Landscape of Self-Employment in India: Trends, Constraints, and Policy Prescriptions," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 68(1), pages 23-44, March.
    • Handle: RePEc:spr:ijlaec:v:68:y:2025:i:1:d:10.1007_s41027-025-00561-5
    DOI: 10.1007/s41027-025-00561-5
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    2. Amrit Amirapu, 2021. "Justice Delayed Is Growth Denied: The Effect of Slow Courts on Relationship-Specific Industries in India," Economic Development and Cultural Change, University of Chicago Press, vol. 70(1), pages 415-451.
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    4. Ufuk Akcigit & Harun Alp & Michael Peters, 2021. "Lack of Selection and Limits to Delegation: Firm Dynamics in Developing Countries," American Economic Review, American Economic Association, vol. 111(1), pages 231-275, January.
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    More about this item

    Keywords

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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