Structural Changes and Labour Reallocation in India: Regional Perspective from Odisha

Structural changes in an economy drive labour reallocation across sectors, influencing productivity, employment patterns, and economic growth. In developing regions, this transition often begins with a shift from agriculture to manufacturing and services, followed by a growing dominance of the service sector. This paper examines how structural change has shaped labour reallocation in Odisha’s economy over the past three decades (1991–2021) in comparison with India. Using the Michaely index, the study measures the extent of sectoral shifts, while a decomposition analysis explores the relationship between structural transformation, economic growth, and employment. The findings reveal that structural change has been a weak driver of economic growth in both regions, with a similarly sluggish impact on employment conditions. This study seeks to guide policymakers in crafting strategies that not only foster structural change but also enhance economic growth and expand employment opportunities in the region.