Bibek Debroy writes on why India should focus more on creating quality jobs

By Bibek Debroy

Employment is a concern. There cannot be employment without growth. This proposition is a truism. But what is the link between growth and employment? Employment elasticity measures the percentage change in employment when there is a 1 per cent change in growth. Over time, a country’s employment elasticity can change, as it has for India. It is not just growth, but the composition of growth that is important. Over the years, many people have computed employment elasticities for India. Methodologies vary a bit. What varies more is the source of data and how dated they are.

Several such elasticities were computed with National Sample Survey Organisation (NSSO) data for 2009-2010. At that time, overall employment elasticity was around 0.20, a decline from 0.40 in the 1980s and 0.50 in the 1950s. Such NSSO data are available for 1977-1978, 1983, 1993-1994, 1999-2000, 2004-2005, 2009-2010 and 2011-2012, not thereafter. Data are for a specific point in time. To compute elasticity, which measures change, one has to compare one point in time with another, say 1999-2000 with 2009-2010. Regardless of which study and what time period, employment elasticity of growth has declined. There are multiple reasons for this. Let us ignore those.

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