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Structural Change and Labour Productivity Growth in India: Role of Informal Workers

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  • Rosa Abraham

Abstract

Labour productivity in an economy or industry may increase due to intrinsic increase in productivity (due to capital deepening or TFP growth) or due to the reallocation of workers to more productive sectors (structural change). Recent trends in the labour force indicate that workers are increasingly being engaged informally, in what may potentially be productivity dampening activities. In this context, this paper examines the productivity implications of the increasing informalisation of the Indian labour force by examining labour productivity by type of worker. The results show that although the movement of workers has been in the direction of relatively higher productivity sectors, the allocation of workers in employment types has not been towards the most productive activity/jobs in that new sector, instead, it has been towards relatively less productive informal activities. The increase in labour productivity from structural change is dampened as workers who move out of agriculture are employed in low productive activities in the non-agricultural sector.

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  • Rosa Abraham, 2017. "Structural Change and Labour Productivity Growth in India: Role of Informal Workers," Working Papers id:12087, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12087
    Note: Institutional Papers
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    References listed on IDEAS

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    1. McMillan, Margaret & Rodrik, Dani & Verduzco-Gallo, Íñigo, 2014. "Globalization, Structural Change, and Productivity Growth, with an Update on Africa," World Development, Elsevier, vol. 63(C), pages 11-32.
    2. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
    3. Marjit, Sugata & Kar, Saibal, 2011. "The Outsiders: Economic Reform and Informal Labour in a Developing Economy," OUP Catalogue, Oxford University Press, number 9780198071495.
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