Regional Patterns and Determinants of Commuting Between Rural and Urban India

The Indian Journal of Labour Economics https://doi.org/10.1007/s41027-020-00276-9 ARTICLE Regional Patterns and Determinants of Commuting Between Rural and Urban India Vasavi Bhatt1 · S. Chandrasekhar1 · Ajay Sharma2 © Indian Society of Labour Economics 2020 Abstract Despite an increase in the number of workers commuting between rural and urban areas, much of the literature on worker mobility continues to be migration centric. This paper establishes the importance of rural–urban commuting in India. As per estimates from Periodic Labour Force Survey 2018–2019, an estimated 18.8 million individuals living in rural are working in urban India and the share of earnings from urban in total non-farm rural earnings is 19.3%. Among all rural workers, 7.3% are rural–urban commuters while only 2.1% of urban workers are urban–rural commuters. We document large variations at the sub-national level. Our results from a multinomial model to understand the factors associated with commuting highlight the importance of lagged regional unemployment rate. A high rural unemployment rate acts as a push factor, and a low urban unemployment rate acts as a pull factor for rural–urban commuting. The urbanness of occupations in a region is also an important correlate of commuting. The paper concludes by highlighting the need to prioritize questions in India’s labour force survey that would help understand the nature of labour mobility and strength of rural–urban linkages. Keywords Labour mobility · Commuting · Rural–urban linkages · Classification of jobs · India JEL Classification J21 · J61 · R12 · R23 * S. Chandrasekhar Vasavi Bhatt Ajay Sharma 1 Indira Gandhi Institute of Development Research, Gen A K VaidyaMarg, Goregaon (East), Mumbai 400065, India 2 Indian Institute of Management, Indore, India 13 Vol.:(0123456789) ISLE The Indian Journal of Labour Economics 1 Introduction Three key factors, viz. distribution of economic activity and availability of jobs over space, distance between residence and job location, and the wage differential between source and destination, together determine the decision of workers to either migrate or commute. In addition to these factors, access to transportation, time and monetary cost of transport are important correlates of the decision to commute to work. While the theoretical models on place of residence and job location are fairly standard,1 the empirical literature on commuting, in context of developing countries is fairly limited, especially between rural and urban areas. In fact, to this date, much of the literature on worker mobility continues to be migration centric. This is despite the fact that there has been an increase in the number of workers commuting between rural and urban areas. It is also true that the number of daily commuters is as large if not larger than either seasonal or permanent migrants in any year (Chandrasekhar et al. 2017). Additionally with the dependence on non-farm employment and earnings among rural households, commuting has become far more important channel to be understood and facilitated. This paper is a contribution to the literature on two-way rural–urban commuting by workers. We analyse data from Periodic Labour Force Survey (PLFS) 2018–2019 which was conducted by India’s National Statistical Office. In 2018–2019, we estimate that 18.8 million individuals living in rural areas were working in urban India, for 2.3 million urban workers the place of work was rural, and 9.7 and 7.8 million rural and urban workers, respectively, had no fixed place of work. These estimates of commuting are lower bound estimates since they do not include workers commuting within rural areas or inter-city commuters. The importance of rural–urban commuting is evident from the fact that the share of earnings from urban areas in total nonfarm rural earnings is 19.3% in 2018–2019. The phenomenon of rural–urban commuting is evident in a diverse group of developing countries.2 Various studies have highlighted the importance of proximity to the city for the mobility patterns of rural workers. A recent study in North East Thailand revealed that individuals are willing to travel up to 20 km from the villages in order to work in the factory clusters (Shirai et al. 2019). In Indonesia, rural–urban commuting has been observed within 60-km periphery of industrialized cities (Douglass 2007). A study of two villages from Bihar in India clearly brought out the importance of distance to the city and connectivity (Datta et al. 2014). They find that in Chandkura, a village near Patna, the capital of Bihar, workers were commuting up to 30 km every day while migration was observed in Mahisham, a village which was not near a large city. Apart from proximity to cities, an important determinant of commuting is the wage gradient, i.e. the extent to which wages decline as distance to the city 1 The theoretical models have sought to explain one-way commuting from residence location in the suburban areas to the central business district (Alonso 1964; Mills 1967; Muth 1969) and commuting patterns in cities with multiple job locations (Brueckner et al. 1999; White 1988). 2 See Sharma and Chandrasekhar (2014) for a discussion. 13 ISLE The Indian Journal of Labour Economics increases. The wage gradient is also a function of the distribution of jobs by industry and occupations along the rural–urban continuum. Based on analysis of data from India Human Development Survey 2004–2005, Sharma (2016) identifies the following patterns in the context of India. First, in locations closer to the city, one is more likely to observer regular wage or salaried individuals or self-employed rather than workers being engaged in agricultural activities. A stylized fact is that income from non-farm activities decreases as distance from urban settlements increase. This pattern is also observed in other countries. Proximity to urban centres is associated with an increase in non-farm employment in Ghana (Diao et al. 2019). Sharma and Chandrasekhar (2016) find that the average wages of rural–urban commuters is the highest followed by workers living and working in rural areas, with rural workers with no fixed place of work having the lowest average wages. Similar results are evident in China. Duvivier et al. (2013) find wages to be higher by 15% in the vicinity of the city as compared to remote hinterland workers. The wage differential and unemployment rate are related. Sharma and Chandrasekhar (2014) find that regional rural and urban unemployment rates and rural–urbanwage differentials are important push and pull factors in the decision to commute. Another consistent finding across developed and developing countries is the relevance of nature of jobs to commuting decisions. Needless to say, the labour market in developed countries greatly varies from that in developing countries. Workers in developed countries have the flexibility in time and place of work which in turn may (...truncated)