Modeling the Effect of Contractual Jobs on Unemployment With a Case Study of the Indian Agnipath Scheme

ABSTRACT Contractual employment offers a relevant avenue for reducing the unemployment period within a labor force. Additionally, they offer valuable work experience to individuals, thereby enhancing their chances of securing regular employment. In this article, we introduce a four‐dimensional stage‐structured model, taking the service period of contractual jobs as a delay parameter. This approach enables us to examine the impact of contractual employment on the dynamics of unemployment. The proposed model is examined using the stability theory of delay differential equations, revealing that the system has a unique equilibrium that is globally stable under certain conditions for any value of the delay parameter. Furthermore, we analytically derive specific conditions under which an increase in the contractual job tenure either increases or decreases unemployment. Additionally, we validate our analytical findings numerically by using India's unemployment‐employment data and considering the employment opportunities provided under the Indian Agnipath scheme as an illustrative example of contractual employment.