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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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    1. repec:spo:wpecon:info:hdl:2441/3lt9cev6r09aqpj1a1248i83gg is not listed on IDEAS
    2. repec:hal:wpspec:info:hdl:2441/3lt9cev6r09aqpj1a1248i83gg is not listed on IDEAS
    3. Johannes Boehm & Ezra Oberfield, 2020. "Misallocation in the Market for Inputs: Enforcement and the Organization of Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 2007-2058.
    4. 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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    6. repec:spo:wpmain:info:hdl:2441/3lt9cev6r09aqpj1a1248i83gg is not listed on IDEAS
    7. repec:hal:spmain:info:hdl:2441/3lt9cev6r09aqpj1a1248i83gg is not listed on IDEAS
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    More about this item

    Keywords

    Self-employment; Trends; Quality; Skills; Gender;
    All these keywords.

    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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