The informal labour market in India: transitory or permanent employment for migrants?

Abu S Shonchoy,Pn Raja Junankar

doi:10.1186/2193-9020-3-9

Abu S Shonchoy, Pn Raja Junankar

Open Access

https://doi.org/10.1186/2193-9020-3-9

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Abstract

This paper studies the characteristics of the workers in the informal economy and whether internal migrants treat this sector as a temporary location before moving on to the organised or formal sector to improve their lifetime income and living conditions. We limit our study to the Indian urban (non-agricultural) sector and study the characteristics of the household heads that belong to the informal sector (self-employed and informal wage workers) and the formal sector. We find that household heads that are less educated, come from poorer households, and/or are in lower social groups (castes and religions) are more likely to be in the informal sector. In addition, our results show strong evidence that the longer a rural migrant household head has been working in the urban areas, ceteris paribus, the more likely that individual has moved out of the informal wage sector. These results support the hypothesis that, for internal migrants, the informal wage labour market is a stepping stone to a secured life in the formal sector. 017; J15; J61; J42.

Highlights

In most developing countries, there is a large sector of the economy that is called the informal sector or the unorganized sector
We find that members who come from the lower social groups are more likely to be in the informal sector
When we look at the distribution of occupations by caste and religion, as depicted in Table 3, we note that Brahmins and high caste people are more likely to be in the higher level occupations, while Dalits and Muslims are more likely to be in the lower level occupations

Summary

Introduction

There is a large sector of the economy that is called the informal sector or the unorganized sector. Our results suggest that urban natives are more likely to be in the formal sector as they have more access to better schools, social networks and job information and referrals compared with the rural-to-urban migrants.

Results

Conclusion