Trends and patterns of labour supply and unemployment in India

This paper discusses various dimensions of labour supply and unemployment in India spanning over the last two decades. It examines the trends in female labour supply during the period 1983-2004, the age demographics of the labour force and education status and their impact on labour supply. The findings of this paper indicate of relevance of different theoretical approaches in labour supply. First, the fluctuation in female subsidiary labour supply over the period gives credence to the theory of collective representation of household behaviour. Second certain life cycle phenomenon, like school work decision, was found to be important in India. Finally, the institutions approach was found to be relevant in explaining stable interstate variation in female labour supply. As a whole, this paper finds that except for school-work decision, the dynamics of labour supply and unemployment in India is largely influenced by changes in women participation. In recent years, there is indication that faster increase in share of educated in youth female labour supply has led to higher female youth unemployment rate and which in turn has raised long-term female unemployment rates.