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Jobless and Stuck: Youth Unemployment and COVID-19 in India

• Research Article
• Published: 27 June 2023
• Volume 71 , pages 580–610, ( 2023 )

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• Swati Dhingra 1 , 2 &
• Fjolla Kondirolli   ORCID: orcid.org/0000-0003-1022-3526 2  

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Youth unemployment is a big challenge in developing economies, but there is a limited understanding of the dynamics underlying the rise in unemployment among young workers. This article examines youth unemployment and inactivity in India, where the economic contraction from the pandemic was solely responsible for reversing the trend of decades of declining global inequality. Young workers face higher unemployment, have fewer transitions to work, and are more likely to get stuck in unemployment. The pandemic disproportionately pushed young workers out of work and reinforced the pre-existing trends of being more likely to be out of work and stuck in worklessness. Young workers have a strong desire for public employment programmes, with over 80 percent preferring job guarantees among policy options to tackle unemployment in survey experiments. Workers who lose their jobs and become discouraged from finding work afterward are most supportive of a job guarantee.

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Source: CEP Survey 2021

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Acknowledgments

Financial support from the ERC Starting Grant 760037 is gratefully acknowledged. The primary survey was reviewed and approved by the LSE Research Ethics Committee (REC Ref. 1129) and conducted by Sunai. We are grateful to Stephen Machin and Uday Bhanu Sinha for their comments. There are no conflicts of interest to declare.

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Dhingra, S., Kondirolli, F. Jobless and Stuck: Youth Unemployment and COVID-19 in India. IMF Econ Rev 71 , 580–610 (2023). https://doi.org/10.1057/s41308-023-00205-y

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Published : 27 June 2023

Issue Date : September 2023

DOI : https://doi.org/10.1057/s41308-023-00205-y

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Why Do Urban Indian Women Suffer Higher Unemployment Than Men?

The existence of a positive gender unemployment gap in urban India is examined. Urban Indian women experience higher unemployment rates than men despite lower labour force participation rates, with the gap rising over time. Regression estimates show the presence of heightened unemployment risks for women even after controlling for demographic characteristics. Differences in demographic characteristics explain little to none of the unemployment gap, speaking to the presence of extensive discrimination in labour markets. The one demographic characteristic that impacts unemployment is higher education, with rising educational attainment of women contributing to a rising unemployment gap between 2011–12 and 2022–23. The burden of unemployment is faced largely by young, highly educated women, a cohort already experiencing significant constraints in the urban Indian labour market.

The shocks of demonetisation and the  COVID -19 pandemic —both occurring within four years of each other—have brought the question of unemployment and job loss in India to the forefront. These questions traditionally did not carry much importance in the Indian labour economics literature. Recent scholarship has pointed to the gendered impact of the pandemic and the lockdown, with women—particularly urban women—disproportionately affected by job losses (Deshpande 2020;  APU 2021;  IWWAGE 2021; Abraham et al 2022; Sahai et al 2023). Urban women’s unemployment rates are higher than that of men, a troubling outcome given the fact that women’s labour force participation rates ( LFPR ) are lower. An analysis of the Periodic Labour Force Survey ( PLFS ) data for 2017–18 and 2018–19 indicates that the rate of employment generation for educated unemployed men is greater than that of women in urban India, indicating longer spells of joblessness for women who choose to participate in the labour force (Menon and Nath 2022).

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