Labor Market Response in South Asia to the Global Recession


Key characteristics of the economic downturn / recession

Economic downturn/recession being experience during 2008-9 and still continuing has a global spread and most developed and many developing countries affected; in fact it all began from the USA, UK and Europe. Recession affected ability to sustain domestic demand mostly due to failure to sustain mortgages which triggered a banking crisis affecting investments, stalling large businesses especially those dependent upon global, multilateral and bilateral cross country production and distribution anchored on international trade. The global production slumped by 20% in the fourth quarter of 2008 (The World Bank, 2009). The average citizens across the developed economies especially, the USA which accounts for over a quarter of global business followed by many nations in Europe (eastern), experienced a decline in real income, postponed and/or squeezed household expenditures. This affected investments, production and trade in countries far and wide who supplied consumer goods and services to the developed world. Asia, especially countries which were dependent upon external trade for growth suffered most such as Japan, China, Korea, and India and so on.

By the time this contagion was taking place there were multiple channels through which the depression affected the households and labor markets. Noteworthy are sudden retrenchments and possibly wage cuts. However, almost the same time (and it is not co-incidental) that during the early period of the downturn oil prices touched the new high crossing USD 100/- and proceed further topping $140/-, unusually large increase in food price without major shortages in food stocks, increase in real rate of interest mostly in developing economies and tightening of credit and commodity markets. Economic slowdown can also be associated with falling prices known as deflation due to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the west.

Although none of the countries in South Asia have recorded negative rates of growth yet, they indeed have experienced a steep decline in rate of growth. For example, India recorded a GDP growth of 6.7% in 2008-9 (CSO, quarterly estimates) lower than 8.7% growth of 2007-8 (Economic Survey, 2007-8)and a considerably low growth compared with the projected growth of 9-10%. The following occurrences in South Asia seem to be due to the impact of global reaction in South Asia:

1. Financial conditions deteriorated in developing countries, also reduced liquidity in the respective economies (India - some banking crunch, a few corporate postponed primary issues and joint ventures). Sharp decline in stock market and frozen real estate market

2. Sharp decline aggregate domestic demand and weak international demand for goods and services; reduction in industrial output

3. Reduced job opportunities, retrenchments and wage cuts (all countries in South Asia). India alone was estimated to have shed more that 500 thousand organized sectors employment during 2008, which is miniscule in terms of its share in the total labor market. Small and medium enterprise sector to suffer most. Increase in poverty and loss of gains in MDG goals likely.

4. In spite of declining commodity prices globally, country level inflationary tendencies, and food price increase (food price especially high in Pakistan and Bangladesh).

5. Drastic fall in global trade, Indonesia, Philippines, Turkey experience a decline of over 20%, India experience a 15 % decline in exports last year after a phenomenal 35% growth achieved previous years (World Bank, 2009). China and other Southeast Asia affected by a drastic fall in exports although not reached the negative side yet.

6. Overall decline in GDP (India recorded a lower 5.8% growth during last quarter of FY 2008-9 and the expected growth for the following quarters is also low).

7. Reports have begun to appear about steep increase in number of people affected by food vulnerability and hunger (UNICEF, 2009).

8. The internal and international economic migrations streams to stall and even reversed especially the rural-urban migration. It is likely that the laid-off nonfarm workforce returns to their respective rural areas and try to work on original occupations especially in agriculture causing serious labor market distortions and reduction in agricultural wages.

South Asian economies are experiencing a differentiated impact of the downturn; and the extent of impact depends upon the structure of the economy such as the extent of dependence on exports, whether it is a single or multiple commodity exporting country and the extent to which the country is dependent on imported capital inputs (FDI & FII) to manufacture exportable goods and intensity of labor used in manufacturing and so on. Consider, India whose export to the United States (which is under serious downturn) account for just over 3% of GDP and India has a healthy trade surplus with the United States. Yet India being a multi-commodity exporter, a number of sectors got adversely affected such as a total collapse of diamond and ornaments industry; steep reduction in textiles, garments and leather products which were exported in large quantities and many others. There has been a decline in overall export proceeds due to a 15% decline of exports in October 2008 and 19 % in February, 2009 (UNDP, 2009?). Industries have to build up now only on the strength of domestic demand and with steep reductions in market prices, which is not easy. The net result is high degree of unemployment of the labor engaged in manufacturing, and especially the migrant labor, mostly from rural areas but also from other urban locations working in a number of urban manufacturing growth centers. Yet only a fraction of Indian labor force is employed in the organized manufacturing sector (NCEUS, 2009; see also Table 1), since overwhelming proportion and size of labor is self employed and occupied in unorganized vocations both in rural and urban areas which are not integrated with the markets especially the global ones. This sector also gets affected albeit indirectly. The case of Pakistan is much more alarming as its economy is most vulnerable due to high fiscal and current account deficits, runaway inflation, dwindling foreign exchange reserves, a very weak currency and above all considerable internal security issues.


Linkage between Recession and Labor Markets

Long term effects on unemployment: In the absence of dependable data on employment and unemployment in south Asia, one is forced to review studies on the impact of recession on unemployment in developed economy such as the USA. Historically recessions have left traces of drastic fall in employment, a considerable size of addition to the unemployed during the medium term - upto 5 years. Schmitt and Baker (2008) estimate such impacts for the USA during the previous three recessions (of 1980-82, 1990-1991 and 2001) and also project impacts subsequent to 2008-9/10 recession under different scenarios. Accordingly, the rate of unemployment for example after the 1980-82 recession in the USA increased to 7.1%, 7.6, 9.7, 9.6 and 7.5 % during the five successive years from the peak year just before the recession when the rate was only 5.8. Similarly, the 2001 (March to November) recession pushed unemployment from only 4% to 4.7, 5.8, 6.0, 5.5 and 5.1 % respectively during the flowing five years. Further they provide the structure of unemployment according to gender, age and race to identify most vulnerable groups that suffer during the recessions, for example the teen and black-teen experienced higher unemployment rates of over 8% during the 2001 recession. Their projections for the 2008-9/10 recession in unemployment rates are as high as around 20% for the teen, 35-40% for black-teen, and 7-8% for Hispanics, even under the mild to moderate recession impact.

What is instructive from the above is the long term effect of recession on unemployment which lingers on for many years after the recession is over, and such impacts can be severe and longer in less developed economics such as those in South Asia. There are fewer studies assessing the impact of economic downturn or recession in the South Asian region.

The World Bank (2009) states, that the current economic crisis has increased poverty by 46 million by the end of 2008 itself (P.9). The UNCEF (2009) estimates just about 100 million more number of people in south Asia have become hungry and food vulnerable (P.2). The effect is transmitted to the poor through unemployment and wage effects. But vulnerability can further get accentuated through a number of indirect mechanisms operating though markets and contraction of consumer demand. Besides, in South Asia, the problem of vulnerability, food insecurity and poverty has exacerbated by country specific violent happenings of extreme order such as in Western parts of Pakistan, Northern Sri Lanka and in Nepal; and natural calamity in Bangladesh and parts (Bihar) of India. Period of recession is now setting in which is not yet well recognized in South Asia. Sectors having local markets are not suffering and in spite of a ‘sense of optimism’ and hope both amongst the poor and others, yet poor are getting affected. Some sectors that have suffered and also affect the poor are, the diamond industry (fully collapsed), recycling business has reduced to half (rag pickers deeply affected), and employment in construction industry has stood still. More micro occupations can be listed from all over south Asia.

Dualism in South Asian (labor) markets complicates the issues further: Broadly, South Asian economies are characteristic of dualism in growth and structure and in labor markets. For example the economy is split in to rural and urban areas with a heavy bias towards the latter. Similarly, large agricultural sector is entirely managed by individual farmers compared to industrial and modern services which are entirely organized and constantly infused with capital and technological inputs promoting unprecedented productivity growth. Similarly, the labor market is structured with informal and unorganized compared with formal and organized sectors. Even the so called organized sector in India employs almost one half of its workforce on casual informal basis (refer Table 1below) thus exposing them to the vagaries of recession. Such casual labor even while working in factory sector does not get coverage of the social security schemes meant for industrial workers.

In an effort to catch up with the west, so to speak, the south Asian economies especially, India and Pakistan have pursued heavy industrialization and modern services development which favor the urban and organized sectors, and mostly at the expense of rural and agricultural sectors. Even public investments are extremely low in rural agricultural sectors where the largest share and number of people are occupied. As a proportion or share, the poor concentrate in rural, agricultural and unorganized sectors where the policy focus is little if at all present.

The entire attention of the public policy, private finance and regulatory mechanism during the downturn has reprogrammed to address problems of the organized manufacturing and service sectors and mostly relevant for urban areas which already have high concentration of both physical and social infrastructure. The recession which has caused job losses in India too (World Bank, 2009) especially in the organized sector which was populated by the migrant labor, on their return to place of origin cause catastrophe in the local labor and wage market. In the absence of any social security for the displaced workers they are under extreme stress and suffering. This in turn has disturbed the labor wage market on the one side while demand for products produced in the rural, agricultural and unorganized sectors have declined due to the direct impact of recession in the first place. Thus the rural economy is now subjected to a kind of double whammy.


Table 1:
Relationship between Sector of Economy and Type of Employment
All Workers 1999-2000 and 2004-05

Formal/Informal Sector Total Employment (in percentage)
Informal/ Unorganized Worker Formal/ Organized Worker Total
2004-05
Informal/ Unorganized sector 99.6 0.4 86.3 (393.2)
Formal/Organized Sector 46.2 53.8 13.7 (62.6)
Total 92.3 7.7 100.0 (455.7)
1999-2000
Informal/ Unorganized sector 99.5 0.5 86.2 (341.5)
Formal/Organized Sector 42.1 57.9 13.8 (54.9)
Total 91.5 8.5 100.0 (396.4)
Note: Estimates based on the usual principle and subsidiary status of workers developed by the National Sample Survey Organization. Figures in parenthesis are in millions of workers.
Source: National Commission for Enterprises in the Unorganized Sector (NCEUS) (2009). The Challenge of Employment in India: An Informal Economy Perspective, Table 2.3, page no. 13. New Delhi. (Calculated by NCEUS using NSSO 55th and 61st Round Employment and Unemployment Survey).



 
Characteristics of labor markets in South Asia

People in populous economies typically depend for a living upon the rural and agricultural occupations. No other region compared to South Asia characterizes this scenario especially during the second half of the last century. Since about decade and half the south Asia especially India is identified as an emerging economy, where the role of rural occupations and farming is fast declining; while contributions from off-farm sectors such as manufacturing, trade and services has increase manifolds. What is less known is, the absence of concomitant shifts in labor force from the rural-traditional and less efficient occupations to urban oriented off-farm and apparently more productive occupations. Further the south Asian economies have a high growth of workforce which is more than 2% per annum. As mentioned earlier, most of the workforce is informal and they are also either illiterate or barely educated, and under skilled. There is also a general tendency to deny work opportunities to women seeking work.

India is characteristic of dualism in it labor market. But low growth of employment is not because of rigidities in labor market (NCEUS, 2009). Lately there has been a decline in overall employment, decline in wages and low growth of formal employment. Disconnect, between growth and employment appear a long lasting problem. There is also no expectation of growth of employment in formal sector employment even when the GDP growth remain high, in fact the Indian planning model did not put foundation of growth on formal sector, instead on small scale industries and micro-enterprises. New employment is capital intensive and not labor intensive in formal sector. There may be growing inequality which can be termed as the ‘latin americanization’ of India. Therefore, policy approach should favor massive investments in informal sectors - may be a shift in investment from formal sector necessary. Public and private sector issues are relevant in this context.

One also notice a slow movement of labor from agriculture to RNFE, yet the nonfarm sector is not able to provide high productivity employment in India, although relative to agriculture these sectors have registered high productivity growth (see Table 2). There is also feminization of agricultural and manual labor (NCEUS, 2008 –Report No2, Shariff, 2009), while the policy emphasis on non existing micro-enterprises (survey of enterprises). Lack of education amongst young labor force is alarming which threaten the very foundation for future GDP growth in the region.




Table 2
Shares of income and labor, and productivity ratios in Rural India

Share of
Income Share of
Labor Income/Labor ratios
%ge Change in
ratios
(1994) (2005) (1994) (2005) (1994) (2005)
Self employed 12 12.9 12.7 8.8 0.95 1.5 58.0
Salaried 16.5 20.4 10.4 9 1.6 2.3 44.0
Manual worker 6.3 12.8 9.8 15.8 0.64 0.81 27.0
Cultivator 55 33.1 43.7 42.3 1.26 0.78 -38.0
Ag Labor 7.9 12 23.5 24.1 0.34 0.5 47.0
Other residual* 2.4 8.8 --- --- --- --- ---
*Other residual is a source of income category but not an occupation
Source: Shariff (2009)


How does the crisis affect the informal economy?

It is estimated that during 2004-05, 420 million or 92 percent of labor force was engaged in informal economy; and only about 8 percent were occupied in the formal sectors in India. The informal workers are the self-employed including the cultivating farmers, casual wage laborers, street vendors to those who operate micro enterprises with less than ten workers, and those regular workers in the formal sector who are without any employment or social security and so on. Eighty-four percent of cultivators are marginal and small farmers operating not more than 2 hectares of land. Agricultural laborers, the bottom layer of the occupational structure, include a majority of workers from Scheduled Castes and Scheduled Tribes, and constitute around 89 million in the total labor force. This is also the poorest segment in the Indian economy from an occupational point of view.

It needs to be recognized that the impact of the crisis is not restricted to the larger, organized segments of industry and is indeed of a much more serious nature among those engaged in the informal economy. Consumption estimates, during the period of growth (1993-94 / 2004-05), suggest a rapid expansion roughly in the top two deciles, fuelling the growth, but the benefits of this growth principally bypassed the vast majority of the population (about 77%) who remained vulnerable with an average per capita daily consumption below Rs. 20. However, during the current slowdown, it is precisely these people, the poor and vulnerable, engaged in informal sector enterprises or informally employed by the formal sector, who will be affected the most adversely:

- the informal workers in the organized sector losing employment – in manufacturing, construction and tradetinal services sectors.

- Small producers who contribute more than 30% of exports and traders have suffered in sectors such as in handlooms, textiles, apparel, leather products, gems and jewellery, metal products, carpets, and various types of agricultural products such as spices, and marine fishery.

- Unorganized sector manufactures with investment below Rs. 5 lakh in ‘plant and machinery’ gets less than 2 percent of net bank credit, yet they are getting liquidated due to the economic downturn.

- Casual workers, the urban self-employed, and rural producers in the unorganized sector, including marginal farmers who are net buyers of food grains, have been affected in the recent months by the sharp upturn in the prices of food grains and the rate of inflation, depressing their real income.

The combined impact on the informal economy would be an increase in livelihood insecurity, decline in income and intensification in the conditions of poverty and vulnerability.


Pakistan has seen unusually large increase in food and every day commodities' prices coupled with the high fuel prices. Stock markets have suffered banks sans deposits and Pakistan rupee has seen a large downward trend. Pakistan gets most of its FDI from the west which has dried down. Pakistani exports are steeply reduced due to slowdown in the west. But so far Pakistan has escaped the recent economic turmoil emerging from the US and engulfing the developed European economies. But as the financial analysts go, it has created a situation loaded with immense possibilities for Pakistan. Top bankers are expecting a lot of eastward investment in the near future as options are drying out swiftly in the developed countries' markets. So far as the rural and informal economy is concerned the impact in Pakistan has been on the similar lines described for India.

Bangladesh has also seen considerable increase in food prices and it is only in April-May 2009 that India lifted the ban on rice export which will help reduce food price inflation in Bangladesh which imports rice from India. Bangladesh which was building up its economy through the value added export projects such as garments has got adversely affected due to downturn.

Nepal is one of the countries which have seen migration as an opportunity since long; the labor market is characteristic of long distance and often international (mostly to India) migration. A neighborly county good gesture of India is that labor migration from Nepal can happen without any restrictions generally imposed by rules of international travel such as restriction due to visa and permit requirements. But an adverse impact of recession in India is being felt in Nepal as many migrant workers will be returning back to Nepal. This will put unprecedented pressure in Nepal as well. Nepal which is experiencing political instability exacerbates the problem of dwindling economic fortunes.


Research Gaps in the area of Labor markets

Understanding the Push and the Pull Factors are important: The prevailing spatial market and non-market characteristics exert pull and push forces to both the capital and labor shifting from the inefficient to efficient sectors of the economy. In this regard the role of rural to urban migration is important. Besides the current trend of development of growth centers either in the form of ‘development corridors’, ‘urban peripheries’ or even the growth of medium and small towns which are promoting nonfarm employment and higher incomes are important to be explored. There could also be reverse association in the form of commutation, backward and forward market linkages in goods and services; and income from remittances from the urban to rural areas that will add richness to this analysis. Reverse migration may have taken a clear shape due to the impact of economic downturn which need to be studied.

Increasing role of remittances: Remittances are now a major source of household income both in rural and urban areas. Data on remittances has for the first time become available from the NSSO 64th round and also from NCAER-IHDS surveys, which can be analyzed.

Restructuring the production sectors due to declining role of land as productive asset: Another area worth exploring relates to the asset ownership profile of farmers, agricultural laborers, artisans and tradesmen in the agriculturally progressive versus marginal areas in India, Bangladesh and Pakistan. Given a long history of feudalism in the region, it would be appropriate to document changes in land ownership pattern after the Independence, subsequently after the green revolution period and in the contemporary context of consolidation of land both due to cultural factors and modern markets based on contract farming. While cultivable land appear to be the dominant asset, both productive as well as contractual in nature; many human capital enhancing assets such as formal education, skills and access to working capital would be denting the importance of land assets. Besides the breakdown of the jajmani system in the region seems to have released a large number of wage workers and artisan from the bondage; but could well have pushed them in penury due to the breakdown of traditional support systems; which then get linked with institutions supporting evolution of safety net mechanisms.


Productivity versus Safety Nets: Why growth in employment is low, what is it which is holding back employment generation, which formal sector not growing needs a study? Beside it is useful to focus on policies which aim for productivity growth versus and provisioning of safety nets. The institutional mechanisms, emanating either from public programs and/or market orientation cushion favorable changes in movement of labor, generate higher income or sustain welfare effects at the household level. One of the challenges in Asia is to accurately trace labor market mobility and associated income changes during fast pace of economic growth . Given that a good proportion of work force is employed in rural-agricultural vocations, it is imperative to understand the dynamics of rural life and survival strategies that people resort to. Further, labor market reforms in developing societies should be aimed to ensure fair distribution of income from out of expanding domestic product. This demands mechanisms that not only enhance household income but also enables food and nutrition adequacy and improves basic human capital such as levels of literacy; disease free enhancement of life expectancy and socio-culturally peaceful living.

 
Migration, Labor flexibility and Poverty in South Asia


Physical movement of labor, manifest in migration mostly from rural to urban; but also the other three identifiable streams including international has not been studied in-depth. Recent evidence suggests closer to 10% of Nepal’s population out migrated, mostly to (India) international destinations, contributing (Rs. 102.1billion 2006-7) over 14% to the GDP , and enabling 11% decline in poverty between 1994 and 2004 . Similarly, remittance from aboard is the largest foreign exchange earner which constitute over 8% of GDP in Bangladesh, and reduced poverty by 6 per cent . India, during 2006-7 received a net of US$ 27.8 billion in remittances which is over 10% of India’s foreign exchange reserve. The remittance for the year 2005-6 was 25.2 billion dollars and for two earlier years it averaged about US$ 22 billion in India. This suggests a substantial role that migration can play in building national economies as well as household welfare. On the similar lines, if one identifies the economic role of internal migration it becomes clear as to how important migration is in the growth process of economics in south Asia. Besides the economic benefits, concurrently there are a number of household level positive changes in attitudes, perceptions and livelihood strategies that take place due to migration. The subject matter of this study is to document the role of migration mostly (internal) in sustaining and improving rural livelihoods and reducing poverty.

Migration, an opportunity or distress: Migration a source to sustain income and consumption but can be at the cost of a decline in a number of human capital formation outcomes such as reduced schooling and literacy, increase vulnerability to sickness, family splits leading to emotional discard and increase in vulnerability. Yet migration has been seen as an opportunity especially by the land less labors, and surprisingly both the educated and illiterate from the rural areas. Concentration of economic activities in urban and semi-urban areas and higher casual wage rates in urban sectors of the economy probably provide the necessary motivating pull, but the push factors in the rural parts which can be due to both natural cause such as declining land productivity, increase pressure of population growth; and also policy neglect and low investment in agriculture.

Migration a bridge between Rural and Urban Economies: Rural and urban livelihoods are interconnected economically, financially, and socially. From a rural perspective, most farmers depend on urban markets to secure their livelihoods such as sale of agricultural produce often on a daily basis such as supply of milk, fruits, vegetables, poultry and so on. Rural households generally depend on cities and towns to access various institutional services such as from hospitals, schools and colleges, banks, and government offices) and for the provision of various private and public goods. The rural households also benefits from remittances sent by family members who migrated to urban areas on employment.

Urban areas are similarly linked to the rural sector, for example, various large businesses and enterprises depend on rural demand for their goods and services (bicycles, ratdios, TVs, FMGC products, seeds and fertilizer, IT enabled communications and so on). Urban areas also rely on rural areas for the supply of raw materials. Urban consumers, on the other hand, benefit from sustained food supply from rural areas. Many poor urban households partly depend on rural activities (e.g., farming) for their livelihoods. The rural sector can also act as a buffer from the impact of macroeconomic shocks on the urban economy. Links between the rural and urban sectors also include flows of information, such as markets and employment opportunities, as well as flows of people moving between rural and urban centers on a temporary or permanent basis

Policies that strengthen or weaken migration

• Inhibiting trade been districts, states, and rural and urban areas by using taxation policies or outright ban.

• Agricultural policies protect urban households, e.g., from high food prices, can indirectly stymie agricultural investment. Low commodity prices discourage farmers from continuing and expanding production, not only affecting the desirability to allocate capital into agriculture, but also potentially creating food shortages

• State policies can discourage people from moving freely between regions, historically there are barriers to labor mobility. Differences emerging from cultural and linguistic differences and variations in life style factors such as food habits and so on can inhibit migration. Besides local politics seeking favors especially jobs, permits and so on only for local population, often referred to as ‘sons of the soil’ policies discourage interstate as well as rural to urban migration.

• Limiting provisions such as housing, water, electricity, roads to living localities populated by migrants

• Limiting social services such as education, health and nutrition/ food access to migrant families. Rural out-migrants usually are unable to claim state benefits in urban areas of India and China (Deshingkar, 2006).


Refined Understanding of Links between Migration and Poverty

The dynamics of migration differs considerably by its type. The characterization of migration streams is not very well documented in economic literature, especially in south Asia, due mostly to want of data and definitional issues. Distinctions, for example, between rural-to-urban and rural-to-rural, just to name two of the four major streams is important. Similarly, distinction between internal and international migration is another useful characterization. Another way is to identify life time versus circular migration which carry very different dynamics; and the intermediating ‘step-wise’ migration in which a migrant cautiously moves over to the final destination after taking a number of shorter and smaller migration moves over time. A recent research , for example, has found that the impact of household welfare especially on gender specific child schooling and health differed substantially depending upon whether the economic migration was within ‘district’, ‘within state but out of district’ and ‘out of state’ migration.

The available data from surveys do not capture many of the variations in migration enunciated above especially the short term and circular migration. Migration is an intermediating process which generally breaks a household, often leaving women, children, the old and infirm vulnerable. Yet this same vulnerability may turn out to be a factor leading to empowerment of women in the rural areas. One such evidence has been feminization of Indian agriculture, the skeptics use this as an evidence of distress but one can look at this phenomenon as empowerment of women instead. Women’s control over resources generally leads to better human capital output indicator such as better education and health conditions of children.

Migration in the south Asian context is considered a sign of distress. A historical assessment of migration since the partition provides credence to such a hypothesis. Often the migrants originating from rural areas belong to asset less households such as the landless, small / marginal farmers (for example, migrant agricultural labour to Indian Punjab from Bihar and Eastern Uttar Pradesh), low castes such as the dalits, tribal groups (for example, migration from high lands and mountains to tarai regions in Nepal) and minorities (for example, Muslims in India and Hindus in Bangladesh). Such high propensity migration often leads to permanent or life time migration as well. This dynamics of migration has immense relevance to the future of social cohesion and peaceful living within a country or region. Further migrating adult male members leave behind dependents who can get into distress and penury. The proposed study intends to document and empirically measure various aspects of class and caste hierarchies, power structures, gender relations, social cohesion and historical factors that have a bearing on migration of people / households and relative impact on livelihoods.

Firstly there is a need to assess migration streams using data from large scale sample survey of households in Bangladesh, India, Nepal and Pakistan Longitudinal datasets are useful in understanding change over time in critical variables at the household level such as occupations, assets, poverty/wealth status. A number of qualitative studies needs to be launched so as to get complementary information to substantiate the quantitative data analysis. Qualitative study and in depth interviews will highlight village level processes and individual life trajectories in response to wider changes (environmental, market and policy).


Hypotheses - Migration, labor mobility and poverty:

• What are the patterns of labor migration in each of the countries? Is there evidence of large-scale movement of labor from low-productivity regions to high-productivity regions?

• To what extent has the shift from farm to nonfarm income sources occurred via migration? In other words, has income diversification taken place through migration of some family members to urban areas?

• Remittances now form a large share of household income both in rural and urban areas of South Asia. Even in India, its importance has increased. New data available from NSSO 63rd round data and data from NCAER’s IHDS can be analyzed to find out the poverty reducing impact of migration linked remittances.

• What types of occupations (using the three-digit International Standard Classification of Occupations) have seen growth, and which occupations have seen a decline, over the last two decades in each of the seven countries?

The frame of analysis of ‘migration and its impact’ must begin with analyzing the economic structure and labor market imperfections followed by the process and mechanisms that in turn determine impact and outcomes. The outcomes in this research are to be identified at the levels of household and community. The set of questions which will be used in both quantitative as well as qualitative approaches are listed below:

a) Economic structure, migration and market imperfections

• Economic structure and income/GDP profiling by source with a focus on rural urban differentials.
• What type of labor market imperfections are promoting migration flows. Is it linked with rural - urban or interregional wage differences?
• What kind of strategy is adopted by migrants to enhance income and savings leading to remittances?
• Role of migration in sustaining household income and impact of remittances on poverty.
• Identify uninsured risks that need to be addressed by public policy?


b) Societal factors and household level social process

• What are the social drivers of migration at the intra-household level and at the village level (e.g. historical connections with certain destinations) and how these vary by social groups?
• The relationship between income and occupation, education, skills; which social groups are excluded from well paid jobs and for what reasons?
• Migration as a response to differential needs – (short versus long term).
• The impact of migration on assets, durables, education, social standing, creditworthiness and how this differs by caste and gender.

c) Gender response and outcomes

Gendered response will be investigated in four different perspectives: (a) implications for the individual woman, (b) implications for the household, (c) implications for the society, and (d) implications for agriculture. The expectation is that while woman assumes a greater role in household decision making as a consequence of migration of a male household member; and over a period of time it generate a number of women empowering effects which will operate through her own self, human capital formation of children, through a number of public and social goods and even improvements in agricultural productivity.


Bibliography and References:
Mujahid, G. B. S (2007). Rural-urban migration, urban underemployment and earnings differentials in Pakistan, Review of World Economics, 111(3):585-598.

Schmitt, J and Dean Baker 2008. ‘What we’re in for: Projected Economic Impact of the next recession’, a paper of the Center for Economic and Policy Research, Washington DC. (www.cepr.nt).

Admes H Richard Jr and Jane J. He (1995) Source of income inequality and poverty in rural Pakistan, Report No. 102, Washington DC: International Food Policy Research Institute.

Muller, Valerie and A. Shariff, 2008. ‘Can Migration Improve Living Standards in Developing Countries? Internal Migration and Welfare in India’, International Food Policy Research Institute, Washington DC, (December).

World Bank 2009. ‘Swimming against the tide: How developing countries are coping with the global crisis’. Background paper prepared by the World Bank Staff for the G20 Finance Ministers and Central Bank Governors meeting, Horsham, the UK, March 13-14.

Behrman, Jere, R (1988). ‘The impact of economic adjustment programs’ in Bell, David E and Michael R. Reich (eds.) Health, Nutrition, and Economic Crisis: Approaches to Policy in the third World, Dover, Massachusetts: Auburn House Publishing Co.

UNICEF (2009). A Matter of Magnitude: The Impact of the economic crisis on women and children in south Asia. Katmandu: Unicef Regional Office.