The impact of trade with ASEAN on India’s employment in industrial sector

Devasmita Jena and Swati Saini

Journal of the Asia Pacific Economy, 2023, vol. 28, issue 4, 1497-1519

Abstract: This paper examines the impact of trade with ASEAN on industry-level employment in India during the period of 1996–1997 to 2016–2017. Using the KLEMS and CMIE databases, we construct a unique dataset covering fifteen industrial sectors in India. We employ the Pooled Mean Group (PMG) approach to estimate the long-run relationship between employment and trade. For the full period of our study, we find that import penetration had a detrimental effect on employment while we find little evidence of any significant effect of export intensity on employment. There exists a structural break at 2004–2005, after which industrial sector has registered a decline in the rate of employment growth as well as India saw worsening of trade balance with ASEAN. Our results suggest that while export and import have had favorable impact on industrial sector employment prior to 2004–2005, AIFTA led to decline in industrial sector employment post 2004–2005.

Date: 2023
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DOI: 10.1080/13547860.2021.1976000

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