Occupational Diversification and Rural Transformation

Abstract

This chapter deals with the nature of rural transformation and factors underlying growth in the rural non-farm economy based on literary evidence and analysis of secondary data. The main arguments and issues are highlighted for the pre- and post- 2000 decade. It includes a state level analysis of the changes in different facets of the employment situation and sectoral income patterns. The employment situation in Gujarat is seen in the context of the larger state level scenario. The changing nature of the relationship of employment and income indicators with the level of non-farm employment over time is sought to be established by means of a correlation exercise. An OLS regression model is developed to identify the chief determinants of the structural changes in the rural economy. There is evidence of accelerated urban growth having a trickledown effect on the rural economy. Unlike the experience of the last decade, rapid developments in the urban sector are deepening the rural-urban linkages and rural areas are no more isolated or bounded spaces. Econometric analysis indicates that raising labour productivity and correcting labour market imperfections is crucial to structural transformation of the rural economy. Policies and institutional arrangements are required to increase labour productivity, wages in rural areas and employment opportunities in the rural sector.