Synthesis of the Impacts of Covid-19 on India’s Labor Market: Looking at People, Places and Policies

Yiming Guo, Ambar Narayan, Pedro Olinto, Sutirtha Sinha Roy and Nayantara Sarma

No 10366, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the impact of Covid-19 on a host of labor market outcomes in India, using a continuous household survey. Cross-sectional trends of headline indicators like unemployment and labor force participation indicate a quick recovery after the unprecedented shock of the pandemic. However, women, marginalized social groups, and youth were more adversely affected, largely due to the nature of their employment before the pandemic. Next, a fixed-cohort analysis with a difference-in-differences regression framework is used to follow the labor market trajectories of a Covid-affected cohort and a pre-Covid cohort for comparison, over a span of 12-16 months. A story of downward transitions emerges, with movements out of the labor force, into more informal and lower-paid types of work in agriculture and rural areas. Higher education and being located in dense, urban areas partially mediated the adverse shocks of Covid-19. Lastly, India’s extensive vaccination campaign had significant positive impacts on employment recovery.

Date: 2023-03-16
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