The cross-sectional nature of Indian employment surveys limits a true understanding of labour market dynamics. Using innovations in official national-level labour surveys that track urban individuals across four quarters, we study transitions from unemployment to employment — defined as the job-finding rate — to understand whether those seeking employment are able to find suitable work in urban India. Our analysis reveals significant weaknesses in the urban Indian economy over the period 2017 to 2023. On an average, only 17 per cent of unemployed individuals in any quarter find a job in the next quarter. Job-finding rates are the lowest for women, the young and the highly educated. Hazard-rate analyses reveals that the same cohorts take the longest time to find jobs, with a majority remaining unemployed even after four quarters of job search. We demonstrate the impact of the pandemic on urban labour markets in two ways. Not only are job-finding rates significantly lower in the post-lockdown period relative to pre-lockdown, there has also been a shift in the nature of jobs created, with casual work rising and regular wage and self-employment falling post-lockdown. Our analysis has important policy implications for understanding labour market dynamics and for the design of urban employment schemes.

Authors:

Rahul Menon & Paaritosh Nath