Structure and growth of employment: evidence from India KLEMS data

This study aims to analyze the structure and trend in employment in the Indian economy between 1980-8081 and 2015-2016.

Use of India KLEMS data set. Estimate growth rate of employment and discuss employment prospects using “Point” employment elasticity.

Whilst India’s GDP growth rate has been quite impressive since the reforms of 1991, the rate of employment growth, especially in the recent period of 2003-2015, has been quite slow (1 per cent) with low employment elasticity (0.1). The pattern of employment growth has also been imbalanced with slow rate of employment growth in manufacturing and rapid growth rate in the construction sector. India now also has low labour force participation rate and a large share of informal employment in the economy.

The limitation is the lack of reliable data on employment for the recent period.

With overall low employment elasticity, India would have to explore sectors where more employment opportunities could be created.

India has to create not only more jobs but also “good” jobs.

The India KLEMS data provide a time series for employment, which has been used in this paper to find “Point” elasticity instead of arc elasticity of employment and is an improvement over existing employment elasticity estimates.