Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors

Sakshi Aggarwal and Debashis Chakraborty ()

Journal of South Asian Development, 2020, vol. 15, issue 2, 238-269

Abstract: During the last two decades, India has witnessed several trade and industrial policy reforms. The objective of the study is to examine the relationship between dynamism of India’s two-way trade, measured through Marginal Intra-Industry Trade (MIIT) index, and labour market adjustments, reflected through absolute employment changes, in select manufacturing sectors over 2001–2015. India’s MIIT in select sectors generally display an upward trend over the sample period, while a mixed dynamics is observed on the employment front. The generalized method of moments (GMM) estimation results indicate that MIIT, increase in productivity, skilled workforce intensity, industrial concentration, incremental FDI inflows and trade openness positively influence absolute employment changes, whereas unskilled wage exerts a negative impact on the same. The analysis further concludes that high relative growth rate, skill-intensity, incremental FDI inflows and higher productivity in a sector, also characterized by higher MIIT, may lead the firms to employ more productive and competitive resources, resulting in higher absolute changes in employment. The obtained results do not support the Smooth Adjustment Hypothesis (SAH) predictions in the Indian context.

Keywords: Marginal Intra-Industry Trade; trade and labour market interactions; India; empirical estimation; GMM; Smooth Adjustment Hypothesis (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0973174120954623 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:soudev:v:15:y:2020:i:2:p:238-269

DOI: 10.1177/0973174120954623

Access Statistics for this article

More articles in Journal of South Asian Development
Bibliographic data for series maintained by SAGE Publications ().