Pro-Poor Growth in India: What do we know about the Employment Effects of Growth 1980-2000?

Abstract

The aim of this Working Paper is to investigate the extent that the economic growth that has occurred in India is pro-poor. We do this by assessing various quantitative and qualitative aspects of the employment that has been generated, specifically: employment elasticities of growth; labour productivity and wage rates; job security (casualisation and multiplicity); and access. For economic growth to generate the kind of employment that contributes directly to poverty alleviation, it must be in sectors that have relatively high elasticities of employment (numbers of jobs created per unit of economic growth); workers must share in the benefits of increased labour productivity through increased wage rates; it should not only be casual, part-time employment at the expense of regular, full-time jobs; and the jobs created must be relatively unskilled in order to be accessible to the poor. Our focus is on trends in rural areas because this is where most poor people live and work. After an Introduction, Section 2 presents summary data on economic growth trends by sector in India from 1980. This sets the scene for an examination in Section 3 of the extent that this growth has generated jobs in different economic sectors. Section 4 examines the impact of growth on the relative balance between self-employment and paid labour. Section 5 moves on to set out changes in labour productivity by sector between 1993/4 and 1999/2000 and to assess whether these have been matched by changes in wage rates. Section 6 looks at changes in security of employment, including casualisation and multiplicity, whilst Section 7 assesses the implications of growth for access to employment, in terms of the skills required for the jobs it has generated, and the location of new jobs. An analysis of the implications of the data for lessons about economic growth and pro-poor employment generation is given in Section 8, followed by implications for various components of policy in Section 9