Bihar’s labour force is poorly educated, but not really poorly paid | Number Theory

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The first of this three-part series looked at the overall size and occupational distribution of Bihar’s workforce and its impact on the state’s economic fortunes. However, the number of workers or what they are doing is not the only determinant of a state’s economic fortunes. One of the key factors driving the productivity and income of workers is their education. This is exactly what the second part of this data journalism series will look at.

For the better educated or self-employed, poor wages could just be a reflection of sub-par enterprises and businesses being located in the state.

Bihar’s labour force is poorly educated compared to the rest of the country

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  Bihar’s labour force is poorly educated compared to the rest of the country

  According to the 2024 Periodic Labour Force Survey (PLFS), the share of illiterate or people with less than even a primary level education in Bihar’s labour force – people either working or looking for work – was 1.4 times more than the national average and higher than all states. While the share of population with a primary/middle school education in Bihar is almost the same as the all-India level, its disadvantage once again increases if one were to compare the share of labour force with secondary or higher-secondary, graduate and above education or people with a diploma/certificate course. What is revealing about Bihar’s labour force is the fact that its relative disadvantage is the biggest in the share of diploma/certificate holders in the labour force. This suggests an aversion to vocational education in the state. To be sure, even at the national level, just 1.8% of the labour force had a diploma/certificate qualification compared to 14.9% with a graduate or higher degree, which suggests that vocational education isn’t a preferred option among workers in India. What is remarkable about Bihar is that its educational disadvantage persists even among the younger part of the labour force.
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  But Bihar’s workers are not really poorly paid compared to the national average

  This is the most counter-intuitive part of Bihar’s labour market analysis. Casual workers in Bihar received slightly higher wages than the all-India average according to the 2024 PLFS data, while the state had a relative disadvantage when it came to earnings for regular-wage/salaried and self-employed workers. A sector-wise breakdown shows that this trend is not because of agricultural wages alone. Casual work is normally the most poorly paid and unskilled kind of work. The fact that Bihar’s casual work wages are higher than the national average suggests that unskilled workers command a wage-premium in the state, while skilled workers, who are relatively scarce in the state, given the state’s poorly educated workforce, are actually poorly paid. One possible explanation of this otherwise surprising fact could be that migration of unskilled workers outside the state creates a shortage of them in Bihar, leading to a premium for unskilled workers. For the better educated or self-employed, poor wages could just be a reflection of sub-par enterprises and businesses being located in the state.
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  Lower share of unpaid workers supports ‘migration’s tailwinds to unskilled wages in Bihar’ theory

  Among the most interesting points in the PLFS data is the statistic on unpaid workers in the economy. Technically called unpaid helpers in household enterprises and classified under the self-employed type of employment, they are a good indicator of the extent of what is often called disguised unemployment in the economy. PLFS data shows that while Bihar had a larger share of casual labour (unskilled work) and self-employment (primarily on account of employment in agriculture) than the all-India shares, and a lower share of regular/wage salaried work, the share of unpaid workers was almost the same as the all-India number in the state. This suggests that poor workers in Bihar perhaps go out of the state and make money rather than joining a low-income household enterprise for no payment.
• This is the second of a three-part series looking at the relationship between Bihar’s labour markets and its economic fortunes. The first part looked at the size and composition of Bihar’s labour force and the third part will look at caste-inequality in Bihar’s labour force.