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Determinants of Employment Potential in India’s Service Sector: The Post-reform Experience

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  • Deepak Kumar Behera

    (National Institute of Technology Patna, Ashok Rajpath)

Abstract

Service sector in India has grown rapidly in the last one and a half decades. Its growth has been higher than the growth in other commodity-producing sectors such as agriculture and manufacturing sectors. If service sector becomes the leads the growth process, the pertinent questions are what is its potential to generate employment? Can we assume it as the emerging sector to accommodate the surplus labour? In other words, the present paper examines the employment dynamics in both organised and unorganised service sectors by empirically estimates the effects of macro-economic variables by using the data from 1972–1973 to 2011–2012. Considering the Keynesian theoretical explanation about the change in employment which depends on expected output or change in output, the empirical estimations corroborate the view that performance of service sector determines the capacity to generate employment in the sector where employment in organised services is positively influenced by non-services output, lagged output of services, human capital and net export and negatively associated with labour productivity, whereas employment in unorganised services is positively determined by non-services output and lag services output, but negatively influenced by productivity, technology and human capital.

Suggested Citation

  • Deepak Kumar Behera, 2018. "Determinants of Employment Potential in India’s Service Sector: The Post-reform Experience," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(4), pages 639-657, December.
    • Handle: RePEc:spr:ijlaec:v:61:y:2018:i:4:d:10.1007_s41027-019-0152-9
    DOI: 10.1007/s41027-019-0152-9
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    References listed on IDEAS

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