7.2 Cross-Sectional Breakdown of the Labor Market

unusually large share of individuals who were either unemployed or out of the labor force in April 2020 reported that, by August 2020, they had moved, not into wage jobs, but into self-employment.

As a result, by August 2020, six months into the COVID crisis in India, employment among individuals as a share of the total working-age population had nearly recovered to pre-COVID levels, although the composition of employment had shifted radically toward self-employment (figure 7.2). Expressed as a share of total employment, formal wage employment shrank by nearly 30 percent between December 2019 and August 2020. Informal wage employment also shrank, although only marginally, while selfemployment expanded from 48.2 percent of the total employed in December 2019 to 55 percent in August 2020.

Post-COVID trends in per capita income largely mirror the trajectory of employment rates. Figure 7.3 compares the trajectory of per capita incomes across formal and informal households in the panel dataset. Households are divided into formal wage earners, informal wage earners, and the self-employed, based on the baseline employment status of the household head in December 2019. The mean per capita income (in logs) is estimated for each group in each month between July 2019 and August 2020. To facilitate the visualization of the differential income trends after the onset of COVID-19, the log

FIGURE 7.2 Cross-Sectional Breakdown of the Labor Market

Source: based on CPhS data. Note: The figure shows the distribution of employed individuals in formal jobs, informal jobs, and self-employment. The data pertain to the full Consumer Pyramids household Survey sample from wave 18 (panel a) to wave 20 (panel b).