Title: Workers at Risk: Panel data evidence on the COVID-19 labor market crisis in India
Authors: Siddharth Sharma, Maurizio Bussolo, Ananya Kotia
Discussant: Yamini Aiyar
We held the fifth Consumer Pyramids Research Seminar on 11 January 2021 at 6.00 PM IST.
The researchers presented results from their analysis of the pandemic’s impact on informal sector workers in India. The study was set in the context of the growing concern regarding informal workers’ vulnerability to the pandemic given their lack of access to social protection.
The authors employed a balanced panel of 14,695 individuals from the CPHS dataset, spanning december 2018- december 2020. Using an event study regression design, they found that the pandemic affected informal workers more than formal sector workers, both in terms of a larger drop in employment and income.
Studying the mechanism for this differential impact of the pandemic, the researchers controlled for industry, occupation, and location-specific heterogeneity in the COVID-19 shock, but found that these factors could not explain the impact. Rather, their results suggested that the difference was due to the intrinsically more flexible nature of informal sector jobs.
On the consumption side, the authors found that even though the informal workers experienced bigger drops in income, they were able to smoothen consumption better than their formal counterparts, and discussed possible explanations for the same.
Yamini Aiyar, the discussant for the paper, emphasized the significance of the findings on labour market churning, and suggested further investigation of this transition. She recommended studying the gender breakup of employment loss, offered possible explanations for the consumption smoothing findings, and outlined questions that the authors could explore.
Following the authors’ responses to the suggestions, the session concluded with a lively discussion between all the panelists on the role of social safety nets and the scope for future research using the CPHS data.