Defining and Measuring Informality in India

Abstract

The present study contributes to the limited literature on the assessment of job quality (JQ) in India. In doing so, it acknowledges the close relationship between JQ, informality and worker wellbeing. We propose an alternative method of defining informality by distinguishing workers based on multiple dimensions of JQ. Our empirical exercise is guided by the capabilities framework as developed by Amartya Sen, Martha Nussbaum, among others. The study uses the National Sample Survey Office (NSSO) data for the three years 2004–05, 2009–10 and 2011–12. Cluster analysis is used to distinguish workers into good-quality and bad-quality jobs. We also apply the fuzzy set theory to compare the JQ of formal and informal workers under different dimensions. Our results indicate a significant overlap in the trends and determinants of informality under alternative definitions. Further, we find extensive work-based insecurities among the informally employed, especially among specific segments of the population. © 2021 Human Development and Capability Association.