A structural approach to projecting the occupational profile: Some results with Indian data

Projecting demand for various occupations on the assumption that their shares will remain fixed in the total employment over the entire period of projection might not be empirically justifiable. Further, it overlooks the complementarity and substitution possibilities between different occupations. An attempt is made in this paper to relax some of these unrealistic assumptions. Using a first-order Markov chain relationship between vectors of occupational proportions, we demonstrate, with Indian data, that this method may be used as a first approximation to the evolution of occupational structure at the aggregate level. An added justification of this formulation—in particular for the developing economies—is its modest data requirements. It may, however, be noted that a complete adjustment mechanism visualized here for the occupational structure is best viewed as a starting point for a more general formulation posited on a partial adjustment mechanism which allows for the interoccupational differences in their educational and training requirements.