An Approach to the Problem of Employment in India

Basu, Deepankar (2018) An Approach to the Problem of Employment in India. Working Paper. Azim Premji University, Bengaluru.

[img] Text - Published Version
Download (556kB)


The challenge of employment in the Indian economy, especially after it growth acceleration since the mid-1980s, relates to its quality rather than its quantity. While employment growth has kept pace with the labour force over the long run, what has grown is informal employment. The coexistence of rapid capital accumulation, robust output growth and lack of growth of formal employment can be understood using the well-known Harris-Todaro model of a dual economy. This framework highlights the key role of the wage gap between the modern and traditional sectors as a determinant of urban informal employment. Hence, one of the most e↵ective and egalitarian ways to address the employment problem is to adopt policies to increase agricultural productivity and income, which can reduce the wage gap. Since crop yields in India are far lower than many other countries in the world, including China, Brazil, and Bangladesh, there is ample scope for land-augmenting and labour-absorbing technological change in Indian agriculture. E↵orts to ramp up industrialization should be taken up in earnest only after the wage gap has been narrowed significantly.

Item Type: Monograph (Working Paper)
Authors: Basu, Deepankar
Document Language:
Uncontrolled Keywords: employment; India; Harris-Todaro; agriculture
Subjects: Social sciences > Economics
Divisions: Azim Premji University > Research Centre > Centre for Sustainable Employment
Full Text Status: Public
Publisher URL:

Actions (login required)

View Item View Item