Abstract
This paper revisits the issue of growth–employment relationship in India. Since employment data are not available on annual basis, the existing estimates are limited in nature. This paper tries to generate total employment on annual basis given the time series information on organized/formal sector employment and the cross-sectional elasticity of unorganized/informal sector with respect to organized sector employment. The growth–employment relationship is then visited both in the time series framework and simultaneous equation framework. After pursuing a vector error correction model, the impulse response function and variance decomposition exercises are carried out to assess the sensitivity of employment in relation to growth shocks and vice versa. Besides, growth–price and employment–price relationship are also examined in the study. Findings tend to suggest that growth does not impact employment immensely, at least in comparison to the effect of employment on growth. However, in the simultaneous equation model after correcting for endogeneity, the employment elasticity of growth turns out to be much higher than what is usually observed. Finally, the policy implications of the study are drawn.
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Notes
- 1.
The organized sector includes all units in the public sector and non-agricultural establishments in the private sector employing at least 10 employees.
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Kumar, Y., Mitra, A., Pradhan, K. (2018). Revisiting Growth–Employment Relationship in India. In: NILERD (eds) Reflecting on India’s Development. Springer, Singapore. https://doi.org/10.1007/978-981-13-1414-8_1
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DOI: https://doi.org/10.1007/978-981-13-1414-8_1
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