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Trade and labor demand in an emerging market economy: an analysis for Indian manufacturing during 1991-2010

Simontini Das (), Ajitava Raychaudhuri () and Saikat Sinha Roy
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Simontini Das: Rabindra Bharati University, India.

Journal of Developing Areas, 2014, vol. 48, issue 3, 353-379

Abstract: The paper investigates into the impact of international trade on labor market in an emerging market economy. In specific, the paper estimates the impact of manufactured exports on demand for both production and non-production workers and employment elasticity for aggregate as well as disaggregated manufacturing in India during post reforms period. Econometric estimation is carried out for a panel data set comprising of fifteen disaggregated manufacturing industries for the period 1991 to 2010 using dynamic panel data estimation methods. The estimates show that exports have a positive impact on aggregate employment level and on employment elasticity for production as well as non-production workers in IndiaÕs aggregate manufacturing. However, the effect of trade on employment elasticity varies across industries. Employment elasticity increases in those industries, where the growth rate of real wage declines or labor market is relatively flexible due to high growth of contract labor during post reforms years.

Keywords: International Trade; Employment Elasticity; Dynamic Panel Data Analysis (search for similar items in EconPapers)
JEL-codes: C23 F14 F16 J21 J23 (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:jda:journl:vol.48:year:2014:issue3:pp:353-379