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Job Polarisation in India: Structural Causes and Policy Implications

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Abstract

Automation impacts wage levels at the micro-level and the structure of employment at the macro-level. Job polarisation is defined as the automation of ‘middle-skilled’ jobs that require routine cognitive and manual applications, whilst high- and low-skilled occupations are preserved. This paper examines the nature of job polarisation in India during the period 1983–2012 when Indian manufacturing sector was being automated. The research uses disaggregated data from National Sample Survey Office and examines the impact of supply-side factors such as nature of employment and presence of educated labour force. The study has three observations. First, the increased demand for high-skilled workers in the formal manufacturing sector is due to skill bias of technology and conforms to theoretical expectation. Second, the transition of agricultural labourers to low-skilled manufacturing sectors such as construction and textiles signals distress in traditional manufacturing sector to provide employment to these groups. Third, the over-supply of secondary and tertiary educated labour force has resulted in the squeezing out of middle-skilled workers from middle-skilled jobs to relatively low-skilled manufacturing and service occupations. This explains the persistence of routine occupations even after automation. The study concludes that in the Indian manufacturing sector, increased demand for high- and low-skilled jobs has coexisted with the middle-skilled jobs due to supply-side factors.

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Notes

  1. The term was used in the tradition of naming major technological inventions such as spinning wheel as the first industrial revolution, electricity as the second and computers as the third. For more, refer Schwab (2017).

  2. In a given model of production function, the direction of technological change is treated as either exogenous (Solow 1957) or endogenous (Aghion and Howitt 1990).

  3. The local and global variation of this production function is given by Jones (2005), whilst variation with respect to short-term and long-term substitution of elasticities is discussed in Gilchrist and Williams (2000).

  4. Substitution also occurs between domestic and foreign labour. For more, refer Markusen et al. (2005).

  5. It is important to note that comparative advantage looks at the least-cost factor at equilibrium. This is in turn determined by the economic cost as well as the opportunity cost of the factor under consideration.

  6. The formal model was given by Acemoglu and Autor (2011). We use the version used in Autor (2013).

  7. The manual of classifying occupations based on skill components widely used in empirical analysis is given by Occupational Information Network (O*Net), which was preceded by the Dictionary of Occupational Titles (DOT).

  8. The assumption here is the abundant presence of labour supply. In a scenario where labour is in short supply, these occupations will be substituted by automation.

  9. The effect of job polarisation can be reflected in pluralistic structural patterns as reflected in the analysis of European economies with monotonic upward rising curve, U-shaped curve or mid-level U-shaped curve depending on the extent of automation. For more, refer Fernandez-Macias (2012).

  10. This is the period relevant to the study when structural reforms in India introduced greater mechanisation, computerisation and automation in its economy.

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Authors and Affiliations

  1. Cambridge Development Initiative, University of Cambridge, Cambridge, CB2 3RF, UK

    Francis Kuriakose

  2. Centre of Development Studies, University of Cambridge, Cambridge, UK

    Deepa Kylasam Iyer

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  1. Francis Kuriakose
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  2. Deepa Kylasam Iyer
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Correspondence to Francis Kuriakose.

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Kuriakose, F., Iyer, D.K. Job Polarisation in India: Structural Causes and Policy Implications. Ind. J. Labour Econ. 63, 247–266 (2020). https://doi.org/10.1007/s41027-020-00216-7

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