Cyclical asymmetries and short-run relation between employment and output: the case of organised manufacturing in India

Abstract

Using time series data from 1990–91 to 2011–12 and panel-data at 4-digit groups of NIC for the period 2008–09 to 2011–12 from the Annual Survey of Industries, this paper examines the argument that fall in employment is deeper in recession than the rise during boom, while fall and rise in output are of same intensity during recession and boom respectively. The result shows that the fall in both output and employment in Organized Manufacturing in India was sharper in downturns than their rise in upturns. Moreover, the decline in output decreases employment more than the employment created by a similar rise in output. For contract workers, the decline in jobs is even sharper in downturns than in upturns. During upturns, existing workers and skilled employees are used more intensively, and more jobs are created for skilled employees.

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Notes

  1. 1.

    The US employment rate contracts deeper and sharper during recessions than it expands in booms. See the studies referred to in Ferraro (2016).

  2. 2.

    Ferraro (2016) stated that unemployment-to-policy stimulus increases substantially during recessions.

  3. 3.

    Taken as the difference between total employees and workers.

  4. 4.

    Since the mean of a time series variable grows over time, calculating skewness coefficient at its level may overstate the negatives than the positives. Therefore, calculating the coefficient of skewness from the growth rate, which is a relatively stationary variable, gives a better picture.

  5. 5.

    Measured in Total Person Engaged

  6. 6.

    Interestingly, employment growth accelerated despite a slowdown in output in 1997–98 and 2008–09, the years crises broke out in, respectively, East Asia and the US.

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Correspondence to Arup Mitra.

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The views expressed in this paper are those of authors and not related to the Government of India.

Annexure

Annexure

See Table 5 and Figs. 1 and 2.

Table 5 Growth rates in organised manufacturing sector (in %)
Fig. 1
figure1

Graphs based on time-series data from 1990–91 to 2011–12. Source: Based on ASI data

Fig. 2
figure2

Graphs based on Panel data at 4-digit of NIC from 2008–09 to 2011–12

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Singh, J., Mitra, A. Cyclical asymmetries and short-run relation between employment and output: the case of organised manufacturing in India. Ind. J. Labour Econ. 59, 203–216 (2016). https://doi.org/10.1007/s41027-017-0055-6

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Keywords

  • Employment
  • Manufacturing
  • Cycles
  • Contract