Productivity and efficiency of labour intensive manufacturing industries in India

Purna Parida and Kailash Pradhan ()

International Journal of Development Issues, 2016, vol. 15, issue 2, 130-152

Abstract: Purpose - This paper aims to make an attempt to identify labour intensity of organized manufacturing industries in India using the Annual Survey of Industry (ASI) data at three-digit level. It estimates total factor productivity growth (TFPG) and technical efficiency for both labour intensive and all manufacturing industries during the pre- and post-reforms periods. Design/methodology/approach - The study uses three approaches to estimate TFPG. They are growth accounting (GA) (non-parametric), production function with correction for endogeneity – Levinsohn-Petrin (LP) (semi-parametric) and stochastic production frontier (SPF) analysis (parametric). The study uses ASI data published by Central Statistical Organization, Government of India for the period 1980-1981 to 2007-2008 for the analysis. Findings - The study finds that the rate of decline of the labour intensity is more pronounced in the case of labour-intensive industries than all the manufacturing industries. The results of GA method suggest that the TFPG of labour-intensive industries has declined continuously from the pre-reforms period to the post-reforms period. Similarly, LP method indicates a continuous decline in TFPG of labour-intensive manufacturing industries during the post-reforms period. Interestingly, the results of SPF method also corroborate the findings of earlier two methods at the aggregate level but vary at a certain degree at the disaggregated level. Originality/value - This paper is useful in the context of India considering the importance given to labour-intensive industries by the present government in terms of reviving the sector and improving the productivity and output.

Keywords: Productivity; Efficiency; Labour intensity; Manufacturing sector in India; D24; L60; O30 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:v:15:y:2016:i:2:p:130-152

DOI: 10.1108/IJDI-12-2015-0081

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