Does Trade Openness Increase Wage Elasticity of Labour Demand in Indian Manufacturing Industries?
This chapter estimates the effect of trade openness on wage elasticity of labour demand for both production and non-production workers in aggregate as well as disaggregate manufacturing in India during the post-reform period. Econometric estimation is carried out for a panel dataset comprising fifteen disaggregated manufacturing industries for the period 1991–2010 using dynamic panel data-estimation methods. The previous studies ignored the impact of export on wage elasticity of derived labour demand, and considered import liberalisation as the sole measure of trade liberalisation. This chapter intends to include import as well as exports measures. Here, a more comprehensive measure of trade liberalisation, trade openness index, is considered for the analysis.
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