CONTENTS List of Tables, Figures, and Boxes vii Acknowledgements xi List of Abbreviations xiii Executive Summary 1 Introduction 1 Structural Changes in the Indian Economy and Labour Market Developments since the 1990s 3 Meeting India's Employment Challenges 7 How Can Policy and Institutional Reforms Help Meet the Employment Challenge? 12 1. Overview and Labour Market Trends 20 Introduction 20 Trends in Labour Supply 24 Employment 29 Wages and Productivity 35 Female Labour Force Participation 38 Scheduled Castes and Scheduled Tribes 40 The Unemployment Situation 42 India's Formidable Employment Challenges 44 2. Employment in the Informal Sector 46 Size of Employment in the Informal Sector 46 Quality of Jobs in the Informal Sector 49 Informal Employment in the Manufacturing and Tertiary Sectors 50 Labour Absorption in the Agricultural and Rural Sectors 55 Policies and Regulations to Support Informal Sector Earnings and Promote Formalization 60 3. Employment in the Formal Sector 64 Employment in Organized Sectors 64 Why has Employment Elasticity in Formal Manufacturing been Low? 65 How has Trade Affected Employment Growth in Manufacturing? 69 Dualism in the Manufacturing Sector 72 Is Outsourcing Mitigating Dualism? 76 Why has Dualism Persisted? 78 The Tertiary Sector 81 4. What Do Regional Differences in Labour Market Outcomes Imply? 87 Introduction 87 The Stylized Facts-How Significant are Regional Differences? 88 Low Migration and Urbanization Rates 93 What is Driving the Regional Differences in Labour Market Outcomes? 95 Summing Up 103 5. Labour Regulations in India: Helping or Hurting Workers? 105 The Role of Regulations in Labour Markets 105 Labour Regulations in India and Their Enforcement 108 Assessing India's Labour Regulations 116 The Impact of Some Key Labour Regulations in India 121 Some Options for Reforming Labour Regulations 132 6. Increasing the Effectiveness of Active Labour Market Policies 140 Introduction 140 Central Public Works Programmes 142 Social Insurance Schemes 147 Employment Exchanges 153 Vocational Education and Training156 Conclusion 164 Appendices 167 References 191