Constraints on the Labour Market Trajectory of Youth and Growth of NEET in India

Abstract

This paper explores the trends, composition, and determinants of the rising ‘Not in Employment, Education and Training (NEET)’ population in India. Based on the national level employment-unemployment surveys and macro level panel data, and using instrumental variable (IV) Probit and system generalized method of moments (GMM) regression models, it is explored that a set of supply and demand side factors determining the growth of NEET population in India. At the micro level, the individual’s level of general education, technical and vocational training, gender, occupation and gender of head of the family, religion, standard of living of the family, earnings of the spouse, and a set of complex socio-cultural factors determine the NEET status of educated and trained youth. On the other hand, the macro level factors, including the growth of mechanization in agriculture, stagnant real wages, sluggish non-farm sector output growth, infrastructural backwardness, and the existing social-cultural setup in which educated youth live together create a negative macro level environment that compels them to remain out of the workforce for a longer period even after completion of their education/training. Based on these results, it is argued that policies aiming at the development of infrastructure along with the promotion of industry and modern service sectors should be given the top priority for checking the upsurge in the NEET population in India.