Output Elasticity Of Employment In The Indian Economy. An Empirical Note

This note tries to look at the responsiveness of employment to the changes in Output during pre and post economic reform periods by estimating a derived demand function for employment with an interaction variable. The empirical results of the present note based on the time series data from 1982-83 to 1999-00 period exemplify that the labour absorption capacity in private organized sector is relatively high as compared to public organized sector during post economic reform period as the differential output elasticity of employment estimated is significantly positive in private organized sector and significantly negative in public organized sector. It can, on the whole, be surmised that the economic growth is less labour intensive in the major industries of the organized sector during post reform period evincing that the objective of providing employment opportunities not only for the additions to the labour force, but also to reduce the backlog of unemployment accumulated from the past is not attained and remains a challenge in the Indian Economy.