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Productivity Shock and Labour Input: Evidence from Correlated Unobserved Component Model

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  • Jitender Singh
  • Arup Mitra

Abstract

This note assesses the relationship between labour productivity and employment in the framework of the unobserved component model as well as the vector autoregressive model. In the case of the organized/formal manufacturing sector in India, the transitory increase in productivity is seen to reduce the man-days in the short run, though it is not statistically significant. Permanent shock to productivity decreases labour inputs permanently, and vice versa and their association is also statistically significant. Incentivizing the firms to expand their activities, diversify production and process secondary products may help restore employment in the face of a permanent productivity shock. JEL Classification: C11, C32, E32

Suggested Citation

  • Jitender Singh & Arup Mitra, 2024. "Productivity Shock and Labour Input: Evidence from Correlated Unobserved Component Model," South Asian Journal of Macroeconomics and Public Finance, , vol. 13(1), pages 53-69, June.
    • Handle: RePEc:sae:smppub:v:13:y:2024:i:1:p:53-69
    DOI: 10.1177/22779787231209612
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    References listed on IDEAS

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    1. Marco Vivarelli, 2014. "Innovation, Employment and Skills in Advanced and Developing Countries: A Survey of Economic Literature," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(1), pages 123-154.
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    5. Sebastian Braun, 2008. "Economic Integration, Process and Product Innovation, and Relative Skill Demand," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 864-873, November.
    6. Ugur, Mehmet & Mitra, Arup, 2017. "Technology Adoption and Employment in Less Developed Countries: A Mixed-Method Systematic Review," World Development, Elsevier, vol. 96(C), pages 1-18.
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    8. Jitender Singh & Arup Mitra, 2016. "Cyclical asymmetries and short-run relation between employment and output: the case of organised manufacturing in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 59(2), pages 203-216, June.
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    More about this item

    Keywords

    Productivity; labour; shock; inflation; technology;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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