Creation and Destruction of Jobs in Urban Labour Market: Role of Gender, Caste and Religion in India

The Indian Journal of Labour Economics https://doi.org/10.1007/s41027-022-00425-2 ARTICLE Creation and Destruction of Jobs in Urban Labour Market: Role of Gender, Caste and Religion in India Panchanan Das1 Accepted: 21 December 2022 © The Author(s), under exclusive licence to Indian Society of Labour Economics 2023 Abstract This study analyses labour market transitions from job to jobless or jobless to job by using Periodic Labour Force Survey (PLFS) of India in urban labour market by applying first-order Markov process in constructing transition matrices and panel logit regression model using personal level information from the PLFS in India for 2019–20. While education is assumed to be the most important factor influencing the process of transitions in the labour market, the circumstance variables like gender, caste and religion are expected to have significant effects on it in a country like India. The empirical results show a significant difference in labour market transitions between men and women. The movement of workers between job status was very low and the major part of the transition occurred in the form of job losses for each type of workers both among men and women and also among all working age group and young age group. Keywords Unemployment · Labour mobility · Panel logit specifications 1 Introduction Firms create jobs in expanding their activities and destroy jobs in dwindling production activities or adopting new sophisticated technology to continue their production activities. In response to such kind of activities by firms workers either get jobs or move away from job to joblessness. Sometimes, workers move from one job to other jobs in hope of better opportunities. Transitions in the labour market may occur in different form: workers who have jobs in a particular industry or occupation may move to another industry or occupation. Periodic Labour Force Survey (PLFS) data with a panel structure allow measurements of these kind of flows of the labour force. This study analyses labour market transitions from job to jobless or jobless to job by using PLFS of India in urban labour market. * Panchanan Das 1 University of Calcutta, Calcutta, India 13 Vol.:(0123456789) ISLE The Indian Journal of Labour Economics Estimates of labour market transitions are informative of labour market dynamics and provide insight into current and future changes in the distribution of workers across the economy. Labour market transition is useful to analyse employment challenges the workers have to face in a market based neoliberal economy by locating the major drivers for job transformation and ultimately by forecasting the transitions into unemployment and the transitions out of unemployment (Barnichon & Nekarda 2012; Barnichon & Garda 2016). International Labour Conference (ILC) (2019) calls for effective measures to support people through the transitions they will face throughout their working lives. The present study demonstrates how labour force surveys can be used to measure labour market transitions in urban India. Although a notable part of women are out of the labour force, this study is restricted to analyse the pattern of transitions within the labour force and tries to locate the relative role of the major determining factors in explaining transition to job losses and transition to job gains only. In this study, we apply Markov process in constructing transition matrices and panel logit regression model to estimate the roles of castes and religion on transitions in losing jobs and getting jobs separately for men and women by using personal level information from the PLFS in India for 2019–20. We have constructed 4 quarterly panel for urban areas for 2019–20 which is described in Section 3. In Section 4, we have computed transitional probability of flow of the working age people as well as young age people Section 5 looks at determinants of labour market transition in urban India by using logit link function. Section 6 provides summary findings and conclusions. The empirical results show a significant difference in labour market transitions between men and women. 2 Related Literature A large number of studies are available in the literature on the dynamics of labour market transitions, but majority of them focussed on developed countries. A little work is available for developing countries primarily because of the lack of appropriate panel data. The early works on this issue were conducted by Hall (1972) and Feldstein (1973) highlighting the role of transitions in understanding unemployment. The cyclical fluctuations in unemployment were analysed by Darby et al. (1985), Hall (2005), Shimer (2012) and many other scholars, but the underlying factors behind the fluctuations are different in different studies. A study by Elsby et al. (2015) focussed on transitions from one job to other by allowing the presence of unemployment for understanding fluctuations in unemployment rate. Nakamura et al. (2020) argue that recessions lead to a composition effect that shifts the pool of unemployed workers towards higher skilled individuals. In the context of developing countries, labour market transitions are looked into mainly by focussing on transitions between informal and formal employment because of the dominance of the informal sector (ILO 2018, Tanzel & Ozdemir 2019, Gutierrez et al. 2019). A very limited research on labour market transitions in Indian labour markets is available in the literature, perhaps because of lack of appropriate household level panel data. However, by using Indian Human Development 13 ISLE The Indian Journal of Labour Economics Survey (IHDS) data for 2005 and 2012, Sarkar et al. (2019) examined labour market transitions of Indian women and observed that women have higher rate of transition from employment to unemployment and lower rate of transition to entry into employment compared to men. Later on, Deshpande and Singh (2021) looked into women’s labour market transitions by using Consumer Pyramids Households Survey (CPHS) data from 2016 to 2019. Our study is closely related to the work of Menon and Nath (2021), and Bhattacharya (2021) who used PLFS data to estimate urban labour market transitions and gross flows of workers. This study is based on PLFS 2019–20, the latest wave of the survey. We have constructed 4 panels for 4 quarters in 2019–20 to calculate transitional probability on quarterly basis by segregating the labour market into self-employment, regular wage employment, casual wage employment, and unemployment in urban India. 3 Data The PLFS for 2019–20 is used in this study. It is a quarterly survey started in 2017–18 by replacing the earlier quinquennial employment and unemployment surveys conducted by the National Sample Survey Organisation (NSSO). The PLFS uses stratified, multi-staged random sampling with rotational panel in urban areas. The first-stage units (FSUs) are urban frame survey blocks and the ultimate samp (...truncated)