Jobless Growth

In: Social Issues

Submitted By shreyjain
Words 13030
Pages 53
Discussion Paper 99

JOBLESS GROWTH IN INDIAN MANUFACTURING:
A KALDORIAN APPROACH

Michele Alessandrini*

November 2009

Abstract
Despite the remarkable economic performance in the last twenty-five years, India maintains a high discrepancy between the rate of growth of the economy and the rate of growth of employment.
Labour elasticity to output has decreased over time and the capability of the Indian economy to generate employment seems to be limited. As a result, more than 60 percent of Indian workers are still employed in agriculture and 94 percent of total labour force can be found in the unregistered segment of the economy. This paper analyzes the jobless growth problem in India in terms of a
Kaldorian framework where the linkages between agriculture and industry enter the labour demand through the changes in the terms of trade between the two sectors. Moreover, we investigate the role of the unorganized sector in influencing the growth of the registered employment. Using a dynamic panel dataset on registered manufacturing from the 15 major Indian states over the period
1980-2004, our System-GMM estimates show that states with a higher growth of demand for industrial goods originating from agriculture also exhibit a higher growth of employment. In addition, in those states where the weight of the unregistered manufacturing has risen over time, the jobless growth problem has worsened.

Keywords: India, jobless growth, manufacturing, intersectoral terms of trade, Kaldor
JEL classification: J22, E26, O14, O53

*

Dipartimento di Economia e Istituzioni, Università di Roma “Tor Vergata”, via Columbia 2, 00133 Roma, Italy.
E-mail: m.alessandrini@hotmail.com
Centre for Financial & Management Studies

1

Jobless Growth in Indian Manufacturing: A Kaldorian Approach

1.

Introduction

The centrality of the role of employment in…...

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