AN ECONOMETRIC ANALYSIS OF DETERMINANTS OF EMPLOYMENT GROWTH IN INDIA'S INDUSTRIAL SECTOR

Deepak Kumar Behera

Regional and Sectoral Economic Studies, 2019, vol. 19, issue 1, 47-62

Abstract: The scale and scope of industrial employment is considered as the path of transformation of an economy. But developing countries like India seems to have missed this transformation trajectory where it's share grows in terms of income but not in employment. Albeit, growth of industrial sector income can spur the growth of service sector, the growth of the former is necessary for the latter and both need a commensurate growth of agricultural output. Therefore, the pertinent questions are what is its potential to generate employment? Can it assume as the emerging sector to accommodate the surplus labour? In other words, the paper examines the employment dynamics in both organised and unorganised Industrial sector by empirically estimates the effects of macro-economic variables by using the data from 1972-73 to 2011-12. Considering the Keynesian theoretical explanation about the change in employment that depends on expected output or change in output, the empirical estimations corroborate the view that performance of industrial sector determines the capacity to generate employment in the sector where employment in organised industrial is positively influenced by non-industrial income, lagged industrial output, investment, non-agricultural import and negatively associated with labour productivity and capital-labour ratio. . It is surprising to see that non-agricultural export have shown a positive impact to employment but very minimal. The employment in unorganised industry is positively influenced by non-industry income, lagged output, and gross capital formation. It is negatively influenced by capital-labour ratio, labour productivity, and non-agricultural export.

Keywords: India; Industrial Sector; Employment; Organised Sector; Unorganised Sector; Investment; labour Productivity; Non-agricultural import. (search for similar items in EconPapers)
JEL-codes: C22 E12 J2 (search for similar items in EconPapers)
Date: 2019
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