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Changing structural composition of the Informal Manufacturing Sector in India during 2011-16: An analysis of unit-level NSSO Data

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  • Balaji, Arun M
  • Vijay, R

Abstract

In the context of an unprecedented decline in the manufacturing employment driven by the informal sector in the post-2010 period, the paper examines the structural compositional changes in the Informal Manufacturing Sector (IMS) in India, the largest employer within the manufacturing sector. Using enterprise-level data between 2010-11 and 2015-16, the paper finds major shifts in employment structures in IMS. Three trends need careful diagnosis. (1) There was tremendous growth in tiny enterprises, with a withdrawal of larger firms. (2) These tiny firms were overwhelmingly owned and operated by female entrepreneurs in rural areas. (3) These trends are more evident in the rural economy, which saw a withdrawal of family labour, and wage labour from the sector. A partial diagnosis lies in understanding the linkages between structural changes within IMS and the job loss nature of the economic growth which in turn has severely impacted the consumption demand.

Suggested Citation

  • Balaji, Arun M & Vijay, R, 2023. "Changing structural composition of the Informal Manufacturing Sector in India during 2011-16: An analysis of unit-level NSSO Data," MPRA Paper 118846, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:118846
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    References listed on IDEAS

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    1. Snehashish Bhattacharya & Surbhi Kesar, 2018. "Possibilities of Transformation: The Informal Sector in India," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(4), pages 727-735, December.
    2. Ranis, Gustav & Stewart, Frances, 1999. "V-Goods and the Role of the Urban Informal Sector in Development," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 259-288, January.
    3. Saheli Bose, 2023. "The penalty of work from home: gender gap in productivity of unorganised manufacturing firms in India," Small Business Economics, Springer, vol. 60(1), pages 351-369, January.
    4. Moreno-Monroy, Ana Isabel & Pieters, Janneke & Erumban, Abdul Azeez, 2012. "Subcontracting and the Size and Composition of the Informal Sector: Evidence from Indian Manufacturing," IZA Discussion Papers 6785, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    informal sector; manufacturing; capitalist development; employment; employment crisis; petty production.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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