The Other Side of Self-Employment: Household Enterprises in India

Non-farm household enterprises are important for a number of reasons to do with poverty and employment creation. They could either be the first unit of microentrepreneurship or a coping strategy for the poorest. Either way, over 11 percent of India’s prime working age population is self-employed in these enterprises. Moreover, they are important also because they are most likely to be informal business ventures and deserve study on all these grounds. Based on data from the Indian National Sample Survey, 50 Round, this paper analyzes the characteristics of individuals operating non-farm household enterprises. It addresses the question –do high skilled and highly educated workers set up these enterprises or are they operated by individuals with low levels of education, working in low status occupations? To what extent are the occupations in household enterprises segregated by sex? Through descriptive, bivariate and multivariate techniques, it demonstrates that household enterprises comprise a highly heterogeneous set of occupations. In rural areas, they are likely to be absorbing the supply of educated labor from among those who do not have access to land. In urban areas, self-employment in household enterprises could be more in the nature of a survival strategy for individuals with lower levels of education. Moreover, they are segmented along religion, caste and gender. Muslims, upper caste individuals and men are more likely to be self-employed in them.