Author(s):
Jeemol Unni
Ahmedabad University
Pritha Dev
IIM Ahmedabad
Published:
Journal of Social and Economic Development , Feb 2021
Citation(s):
Citation(s) not specified
JEL Code(s):
JEL code(s) not specified.

In this paper, we discuss the impact of the macroeconomic shock of demonetisation on employment in the five Western states of Gujarat, Maharashtra, Rajasthan, Chhattisgarh and Madhya Pradesh. We analyse the impact of the macroeconomic shocks on workforce participation rates (WPR) in the states. We do this separately for overall and separately for men and women. We use the Center for Monitoring the Indian Economys (CMIE) Consumer Pyramids Household Survey (CPHS), which allows us to look at monthly workforce participation rates of men and women in the age group of 1564 years for the period from January 2014 to December 2019. Overall, the trendline structural break figures of the shock of demonetisation were corroborated by the regression results. Demonetisation had a significant negative impact on WPR of all workers in Maharashtra, Madhya Pradesh and Chhattisgarh and on male WPR in Maharashtra, Madhya Pradesh and Rajasthan. A significant negative impact of demonetisation on womens WPR was corroborated by the regression equations for Chhattisgarh and Madhya Pradesh. Employment for all, males and females in Gujarat was not significantly affected by the shock of demonetisation. It appeared that workers in Gujarat were better able to negotiate the shock.

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