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Productivity and efficiency of labour intensive manufacturing industries in India

Author

Listed:
  • Purna Chandra Parida
  • Kailash Chandra Pradhan

Abstract

Purpose - This paper aims to make an attempt to identify labour intensity of organized manufacturing industries in India using the Annual Survey of Industry (ASI) data at three-digit level. It estimates total factor productivity growth (TFPG) and technical efficiency for both labour intensive and all manufacturing industries during the pre- and post-reforms periods. Design/methodology/approach - The study uses three approaches to estimate TFPG. They are growth accounting (GA) (non-parametric), production function with correction for endogeneity – Levinsohn-Petrin (LP) (semi-parametric) and stochastic production frontier (SPF) analysis (parametric). The study uses ASI data published by Central Statistical Organization, Government of India for the period 1980-1981 to 2007-2008 for the analysis. Findings - The study finds that the rate of decline of the labour intensity is more pronounced in the case of labour-intensive industries than all the manufacturing industries. The results of GA method suggest that the TFPG of labour-intensive industries has declined continuously from the pre-reforms period to the post-reforms period. Similarly, LP method indicates a continuous decline in TFPG of labour-intensive manufacturing industries during the post-reforms period. Interestingly, the results of SPF method also corroborate the findings of earlier two methods at the aggregate level but vary at a certain degree at the disaggregated level. Originality/value - This paper is useful in the context of India considering the importance given to labour-intensive industries by the present government in terms of reviving the sector and improving the productivity and output.

Suggested Citation

  • Purna Chandra Parida & Kailash Chandra Pradhan, 2016. "Productivity and efficiency of labour intensive manufacturing industries in India," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 15(2), pages 130-152, July.
    • Handle: RePEc:eme:ijdipp:v:15:y:2016:i:2:p:130-152
    DOI: 10.1108/IJDI-12-2015-0081
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    Citations

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    Cited by:

    1. Ren, Xiaohang & liu, Ziqing & Jin, Chenglu & Lin, Ruya, 2023. "Oil price uncertainty and enterprise total factor productivity: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 201-218.
    2. Rawat, Pankaj S. & Sharma, Seema, 2021. "TFP growth, technical efficiency and catch-up dynamics: Evidence from Indian manufacturing," Economic Modelling, Elsevier, vol. 103(C).

    More about this item

    Keywords

    Productivity; Efficiency; Labour intensity; Manufacturing sector in India; D24; L60; O30;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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