Rural Non-farm Employment in Eastern India: Implications for Economic Well-being
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Rural Non‑farm Employment in Eastern India: Implications for Economic Well‑being Anjani Kumar1 · Nijara Deka2 · Seema Bathla2 · Sunil Saroj1 · S. K. Srivastava3
© Indian Society of Labour Economics 2020
Abstract To be inclusive, economic development in India must focus on eastern India, which has a high population growth rate, population pressure, high incidence of poverty, small landholding size in agriculture, and underdeveloped rural infrastructure. Employment diversification towards the non-farm sector in eastern India from 1993–1994 to 2011–2012 shows considerable variation by income group and farmsize. The effects of diversification—whether driven by pursuit of higher income or distress—are stratified. Estimates based on instrumental variable regressions suggest that all types of non-farm employment improve the economic well-being of households. Keywords Employment · Rural non-farm sector · Impact · Eastern India
* Anjani Kumar [email protected] Nijara Deka [email protected] Seema Bathla [email protected] Sunil Saroj [email protected] S. K. Srivastava [email protected] 1
International Food Policy Research Institute, South Asia Office, New Delhi, India
2
Centre for the Study of Regional Development, School of Social Science, Jawaharlal Nehru University, New Delhi, India
3
National Institute of Agricultural, Economics and Policy Research (NIAP), New Delhi, India
13
Vol.:(0123456789) ISLE
The Indian Journal of Labour Economics
1 Introduction India has experienced rapid economic growth in the past few decades, but the pace of its growth has been biased towards urban areas. Over-dependence in rural areas on the low-productivity agriculture sector has brought about a high and persistent disparity between rural and urban incomes (Chand et al. 2017). In the historical pattern of structural transformation, the income and employment shares of agriculture in total gross domestic product (GDP) and workforce decline unequivocally, but the high income disparity in India has bucked this trend. Increasing, the non-farm employment and diversification can boost the process of structural transformation and help India achieve its objectives of equitable and inclusive economic development (Binswanger-Mkhize 2012). Occupational diversification in rural India is increasing, as is its contribution to income and employment (Lanjouw and Lanjouw 2001; Lanjouw and Shariff 2002; Lanjouw and Murgai 2009; Haggblade et al. 2010). The non-farm sector contributes 55.9% of the output in rural areas and 34.8% of the employment (Chand et al. 2017). Within the narratives and counter-narratives of diversification of rural non-farm employment (RNFE), the key issue is to understand whether the ongoing structural transformation is reducing the economic deprivation of rural households. Several pull and push factors determine the movement of rural workers towards non-agricultural activities. One view holds that the non-farm sector plays a major role in the present developmental process: it has considerable
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