Structural Transformation and Employment Generation in India: Past Performance and the Way Forward

Basole, Amit (2022) Structural Transformation and Employment Generation in India: Past Performance and the Way Forward. The Indian Journal of Labour Economics. ISSN 0971-7927

[img] Text - Published Version
Download (1MB)


Historical experience suggests that a sustained rise in per capita incomes and improvement in employment conditions is not attainable without a structural transformation that moves surplus labour from agriculture and other informal economic activities to higher productivity activities in the non-farm economy. In this paper, I analyse India’s performance from a cross-country comparative perspective, estimating the growth semi-elasticity of structural change. Using a cross-country panel regression, I estimate the efectiveness of growth in moving workers away from agricultural and informal activities as compared to other developing countries at similar levels of per capita income. I show that the performance in pulling workers out of agriculture is as expected given its level and growth of GDP per capita, but the same is not true for pulling workers out of the informal sector. I also propose the following fve indicators that need to be kept track of when evaluating the growth process: the growth elasticity of employment, the growth semi-elasticity of structural change, the growth of labour productivity in the subsistence sector, the share of the organised sector in total employment and the workforce participation rate. Comparing these indicators across periods, states, regions or countries, allow us to understand which sets of policies have worked better than others to effective improvements in employment conditions. When taken together the indicators allow us to set structural change targets as well as to say whether the current pattern of growth is going to be sufcient to meet those targets.

Item Type: Article
Authors: Basole, Amit
Document Language:
Uncontrolled Keywords: India, Structural change, Employment, Cross-country panel analysis
Subjects: Social sciences
Divisions: Azim Premji University > School of Arts and Sciences
Full Text Status: Public
Publisher URL:

Actions (login required)

View Item View Item