Year: 2021 | Month: December | Volume 10 | Issue 4

Economic Crisis and Labor Consumption: Calibrating Wage for Informalized Labor Households

Ujwal Prakash


Economic shocks impelled by a growth retarding phenomenon hinders the overall functioning of an economy and influences the constituent unit of society, i.e., humans, with severity of its effect stretched to that extent of society which remains vulnerable to such shocks. The informal community of labor, participating in economic activity without the cover of social security often becomes a recipient of the economic and policy variations leading to unrest on their way to development. The present study explores the constraints of labor consumption as experienced by the informal labor in India due to restrictive lockdown imposed to contain the spread of covid-19 with the purpose to ascertain its determinant by explicating consumption function in the analysis and empirically using multiple regression on macro variables that influences consumption. It was observed that during lockdown
the labor’s consumption was dependent on the wealth accumulated in the past, whereas the regression estimation suggested that the consumption expenditure was influenced significantly by their earnings and mildly by the level of inflation in the country. In pursuit of assessing labor’s desired earnings and their consequential migration, a theoretical condition is quantitatively explored. The study suggests that the government should assist the informal labor in upgrading their employable skills to help them secure a job with desired earnings in a quest to sustain present as well as future consumption needs and recommends that efforts should be made to endorse national policy empowering the labor towards wealth accumulation and social security


  • Effect of the economic crisis on aggregate labor consumption.
  • Examining the factors influencing consumption demand among informal labor-force.
  • Importance of employability.

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