Adjustment to Trade Opening: The Case of Labor Share in Indiaâ€™s Manufacturing Industry
Prachi Gupta and
Working Papers from eSocialSciences
This paper is to studies how manufacturing plants in India adjusted to trade liberalization during the period 1998â€“99 to 2007â€“08. It estimates how the labor share changed due to tariff reduction. The results indicate that a decline in output tariffs led to an increase in the labor share of income. In contrast, a fall in input tariffs led to a decrease in the labor share. Controlling for factor intensity, it finds that in technology intensive and human capital resource intensive sectors, both a decline in input and output tariff rates led to a decline in labor share. A fall in tariffs only led to an increase in labor share for labor intensive and low-technology plants. Hence, Indiaâ€™s bias towards capital and technology intensive production explains the overall decline in labor share in the post reform period. Furthermore, the empirical results show that labor adjustment occurred more efficiently in Indian states with flexible labor laws.
Keywords: trade reforms; labor share; India; manufacturing; capital; technology intensive production; labor share; labor laws; human capital; trade liberalization; output tariff; tariff reduction. (search for similar items in EconPapers)
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://www.esocialsciences.org/Download/repecDownl ... AId=12810&fref=repec
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ess:wpaper:id:12810
Access Statistics for this paper
More papers in Working Papers from eSocialSciences
Bibliographic data for series maintained by Padma Prakash ().