THE PRODUCTIVITY-WAGE AND PRODUCTIVITYEMPLOYMENT NEXUS - A PANEL DATA ANALYSIS OF INDIAN MANUFACTURING

Mita Bhattacharya (), Paresh Kumar Narayan (), Stephen Popp and Badri Rath

No 07-09, Development Research Unit Working Paper Series from Monash University, Department of Economics

Abstract: This paper investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973-74 to 1999-2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labor market has a significant influence on manufacturing productivity, employment and real wages in case of Indian manufacturing.

Keywords: Labour Productivity; Real Wages; Panel Unit Root Tests; Panel Cointegartion Tests; Manufacturing. (search for similar items in EconPapers)
JEL-codes: O47 O30 O53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-eff and nep-lab
Date: 2009-04-02
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Journal Article: The productivity-wage and productivity-employment nexus: a panel data analysis of Indian manufacturing (2011)
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