Why big cities keep drawing India’s workforce

BEing an enterpriser is thomas more rewarding than existence a paid employee in any of republic of india’s 46 cities with universe in excess of a million (2011 census) than in urban India as a whole. Such million plus cities may also be more attractive to migrant workers, especially in India’s blue-collar economy, because they offer more opportunities than smaller cities.Between these two facts—released by the National Statistics Office (NSO) as the first ever statistical insight on labour markets in India’s million-plus cities – lies an important and perhaps troubling inference: India’s large cities attract workers less because of economic dynamism and more because of the sheer advantage of their size. Much of the migration would not happen if opportunities were available in smaller towns. This also suggests a policy imperative for governments to incentivise growth of smaller cities.In 2025, a self-employed individual earned ₹30,858 per month in a million-plus city, 34% more than what they would have earned for a similar type of work in all of urban India. The million-plus city premium was significantly smaller for regular salaried employees/casual labour, with respective monthly/daily earnings in million-plus cities and premium vis-à-vis all of urban India being ₹28,808/624 and 9.7%/13.5% respectively.The numbers raise a big question. Why do so many of India’s workers come from smaller towns and villages to work in India’s big cities?It is the size of the market, silly.For a similar labour force participation rate (LFPR) – the share of people working or looking for a job – in million-plus cities (52.4%) and other urban areas (52.1%), the share of regular wage/salaried employment is significantly higher in the former (58.5%) than the latter (42.9%). It is not just the big companies which create more opportunities in the million-plus cities. Workers engaged in public/private limited companies in the million-plus cities was 24.3%, compared to 17.2% in urban India as a whole.Even the share of informal enterprises with at least one hired worker was higher in million-plus cities (24.3%) than in other urban areas (19%). A comparison of informal sector enterprises and workers underlines the same pattern seen in self-employment premium in the million plus cities. Gross Value Added (GVA) per establishment in million-plus cities was 28.7% higher than in the rest of urban areas, while GVA per worker and emolument per worker premium was significantly smaller; 17.3% and 13.1% respectively.While the NSO press release highlights the fact that women-owned unincorporated proprietorships exceed 40% of total unincorporated proprietorships in Surat, Vadodra and Pune “highlighting strong female entrepreneurial participation in these cities”, the overall situation for women remains unfaovurable as far as entering the labour market is concerned. More than two-thirds of women not in labour force cited child care/ personal commitments in home-making as the reason for not doing so.To be sure, the headline findings are likely to hide significant divergence among cities as the list includes cities as different as Patna and Delhi. The NSO had not released the report at the time of filing this story.