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

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  • Afridi, Farzana

    (Indian Statistical Institute)

Abstract

This paper assesses the structure and quality of self-employment in India over a decade. 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 digitization for self-employment and the need for reforming the legal framework of self-employment in India.

Suggested Citation

  • Afridi, Farzana, 2025. "The Landscape of Self-Employment in India: Trends, Constraints and Policy Prescriptions," IZA Discussion Papers 17842, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp17842
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    References listed on IDEAS

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    1. repec:spo:wpecon:info:hdl:2441/3lt9cev6r09aqpj1a1248i83gg is not listed on IDEAS
    2. 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.
    3. 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.
    4. World Bank, 2024. "World Development Report 2024," World Bank Publications - Books, The World Bank Group, number 41919, April.
    5. 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.
    6. repec:spo:wpmain:info:hdl:2441/3lt9cev6r09aqpj1a1248i83gg is not listed on IDEAS
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    Keywords

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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • 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

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