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COVID-19 disaster and employment generation program in a developing economy

Author

Listed:
  • Sarbajit Chaudhuri

    (University of Calcutta)

  • Sushobhan Mahata

    (University of Calcutta)

  • Salonkara Chaudhuri

    (University of Queensland)

Abstract

We develop a three-sector Harris-Todaro (HT)-type model for a developing economy to analyse the failure of the employment generation program in the rural sector as a policy response to counter Covid-19-induced reverse migration of labour. First, we distinguish between two alternative modes of implementation of the program and show how they produce diverse outcomes on both unemployment and welfare. Welfare is measured in terms of Sen’s (Sen, J Public Econ 4:387–403, 1974) index which is inequality (distributional) sensitive. If the authority’s sole target is to lower unemployment, the policy fails miserably because it not only raises unemployment but also worsens welfare. On the contrary, if the policy aims at both rural infrastructure development and additional employment creation, it does not necessarily worsen social welfare. However, the rural employment generation program may turn out to be counterproductive in the latter case provided the urban region is relatively more labour abundant vis-a-vis the entire rural region. Numerical examples are constructed to validate the sufficient and necessary condition leading to the counterproductive outcome. Finally, we have advocated in favour of a composite policy that might succeed in minimizing further possible damage of the COVID-19 disaster.

Suggested Citation

  • Sarbajit Chaudhuri & Sushobhan Mahata & Salonkara Chaudhuri, 2022. "COVID-19 disaster and employment generation program in a developing economy," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 46-64, June.
    • Handle: RePEc:spr:jsecdv:v:24:y:2022:i:1:d:10.1007_s40847-021-00171-z
    DOI: 10.1007/s40847-021-00171-z
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    More about this item

    Keywords

    Employment generation; Unemployment; Social welfare; COVID-19 disaster;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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