Changing contours of growth and employment in the indian labour market: a sectoral decomposition approach

Abstract

This study analyses the changing contours of employment and economic growth in the Indian labour market over four decades (1983–2019-20) using the NSSO-EUS & PLFS datasets. Here, the Shapley Decomposition methodology (as developed by World Bank) has been used to decompose the per capita income growth into changes in employment, changes in output per worker, and the population change components at the aggregate level and by sectors for the Indian labour market. The study unfolds a pattern of inter-sectoral variations in growth in income and employment since pre and post-reform periods. The estimate shows that the major contributor to the value-added is output per worker and inter-sectoral shifts. Further, despite the output growth in the industrial and service sector, it didn't reflect in absorbing the labour force entering the job market. The aggregate employment and income growth pattern entails proper policy intervention in the Indian labour market.