Dynamics of Rural Labor Markets in India: Implications for Inclusive Development Strategy

Abstract

The rural labor market in India has undergone remarkable changes over the years. Diversified opportunities for employment with increased economic growth, introduction of employment guarantee scheme, demographic change along with expansion of universal education for all girls and boys, increased connectivity and mobility from rural to urban areas, changes in trade policies, attitude towards participation of women in economic activities outside their home have altered the rural labor market dynamics. This policy brief deals with the dynamics of rural labor markets in India. It focuses on the trends in rural employment, rural labor markets, and sources of livelihood and living standards of the rural labor class. It documents both short and long-term changes in rural labor markets observed in India. It identifies the key drivers of changes in the rural labor market, determinants of labor supply and wage rate. Finally, some suggestions are put forward to overcome the challenges in the rural labor market and for an inclusive growth strategy in India. The term inclusive growth is used in this policy brief to include landless labor, smallholder farmers, women and youth who will all be an integral part of the growth process and benefit from the rural and overall economic growth in the country