The present empirical exercise tries to look at the growth rate of employment and the responsiveness of employment in agriculture and allied activities to the changes in total employment in the organized sector during pre- and post-economic reform periods, by estimating a demand function for employment with an interaction variable. The results of the exercise based on the time series data points from the 1970 to 2002 period, which illustrate that the differential growth rate of employment in agriculture and allied activities is negative, both in private and public organized sectors. The results also show that differential elasticity of employment in agriculture and allied activities in the public sector is positive but insignificant, showing the absence of shift in the magnitude of employment elasticity during the post-economic reform period. The differential elasticity of employment in agriculture and allied activities in the private sector and total organized sector is significantly negative during the post-reform period, showing the fact that reforms have deteriorated the employment opportunities in agriculture and allied activities in the Indian economy.

An imperative objective of development planning in the Indian economy has been to provide for increasing employment opportunities. Agriculture and allied activities in the Indian Economy have been the main source by which more employment opportunities were generated in India. The degree of employment [labor] absorption in agriculture and allied activities in the Indian Agriculture can be understood by the magnitude of elasticity of employment. In other words, the concept of elasticity of employment in a particular sector of the economy helps in understanding the extent of labor absorption capacity of that sector in the economy. The responsiveness of employment [labor market] to the changes in total employment in agriculture and allied sector, and the presence of shift [upward/downward] in the responsiveness of employment in agriculture and allied sector to the changes in total employment, owing to new economic policy introduced since 1991, need to be empirically examined by fitting an employment function with an interaction variable to time series data points. The present exercise is an endeavor in this direction. The growth rate and responsiveness of employment in agriculture and allied activities to the changes in total employment [private and public sectors] during the pre-economic reform period, and the presence of shift by differential elasticity of employment in agriculture and allied sector during post-economic reform period have been empirically examined in the present exercise.