Rise of unpaid family workers evidence on distress-driven employment growth in India

Abstract

While the surge in India’s labour force participation rate and worker population ratio since 2017–18 has reversed the earlier decline in female labour force participation, it raises the crucial question of whether this trend is driven by robust economic growth or underlying economic hardship. This paper addresses this debate by focusing on the rapid increase in the most vulnerable employment categories: unpaid family helpers and own-account workers. Our findings indicate that helpers exhibit significantly lower productivity compared to any category of paid workers, with matched estimates showing their attributable daily earnings around ₹50. The real average daily earnings for OAWs, the largest employment group, dropped by around 8% between 2017–18 and 2023–24. The evidence strongly supports the interpretation that the recent expansion in employment reflects economic distress leading to subsistence work.