Informal Tradables and the Employment Growth of Indian Manufacturing

58 Pages Posted: 20 Apr 2016

See all articles by Syed Ejaz Ghani

Syed Ejaz Ghani

World Bank

William Kerr

Harvard University - Entrepreneurial Management Unit

Alex Segura

Harvard Business School

Date Written: March 2, 2015

Abstract

India's manufacturing growth from 1989 to 2010 displays two intriguing properties: 1) a substantial fraction of absolute and net employment growth is concentrated in informal tradable industries, and 2) much of this growth is connected to the development of one-person establishments. This paper investigates the causes and determinants of these growth patterns. The rapid urbanization of the informal sector plays the strongest role, while there is some evidence for subcontracting by the formal sector and a "push" entrepreneurship story. The paper also finds modest connections of this growth to rising female labor force participation. The connection between the presence of informal manufacturing and local productivity levels is strong, and varies across urban and rural areas in ways that bolster urbanization and subcontracting hypotheses.

Keywords: Labor Markets, Pro-Poor Growth, Labor Policies, Microfinance, Banks & Banking Reform

Suggested Citation

Ghani, Ejaz and Kerr, William R. and Segura, Alex, Informal Tradables and the Employment Growth of Indian Manufacturing (March 2, 2015). World Bank Policy Research Working Paper No. 7206. Available at SSRN: https://ssrn.com/abstract=2573418

Ejaz Ghani (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Alex Segura

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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