Increasing Compulsion to Work for Wages: Old Age Labor Participation and Supply in India over the Past Two Decades

Abstract

Against the backdrop of the general absence of social benefits (for the elderly) and growing nuclearization of families, we examine the changes in determinants of wage labor participation and supply of the elderly (60 years and above) over the last two decades in India. We use national level Employment-Unemployment Surveys (1993–94 and 2009–10) and Probit as well as Heckman sample selection models for the estimation. Findings show that the negative association between wage labor participation and the age of the elderly has weakened during the study period indicating that the extent of decrease in wage labor participation due to increase in age of the elderly has come down during 1993–2010. Findings also indicate that the elders from poorer and weaker sections have higher compulsion for labor participation in both rural and urban areas and more so in 2009–10. Further, we find that the elders from smaller households (with 4 or less members) are more likely to participate in wage labor in rural as well as urban areas. Moreover, we find that the elders from the poorer sections in rural areas are compelled to work for higher number of days in a week in comparison to the richer elders and this relationship has become stronger in 2009–10. The findings call for a universal pension scheme for improved welfare of the elderly population in India.