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The Productivity-Wage And Productivityemployment Nexus - A Panel Data Analysis Of Indian Manufacturing

Author

Listed:
  • Mita Bhattacharya
  • Paresh K. Narayan
  • Stephen Popp
  • Badri N. Rath

Abstract

This paper investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973-74 to 1999-2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labor market has a significant influence on manufacturing productivity, employment and real wages in case of Indian manufacturing.

Suggested Citation

  • Mita Bhattacharya & Paresh K. Narayan & Stephen Popp & Badri N. Rath, 2009. "The Productivity-Wage And Productivityemployment Nexus - A Panel Data Analysis Of Indian Manufacturing," Development Research Unit Working Paper Series 07-09, Monash University, Department of Economics.
    • Handle: RePEc:mos:druwps:2009-07
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    References listed on IDEAS

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    Cited by:

    1. Bhattacharya, Mita & Narayan, Paresh, 2015. "Output and labor productivity in organized manufacturing: A panel cointegration analysis for India," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 171-177.
    2. Dosi, Giovanni & Virgillito, Maria Enrica & Yu, Xiaodan, 2020. "The wage-productivity nexus in the world factory economy," World Development, Elsevier, vol. 129(C).
    3. Timo Mitze & Selin Özyurt, 2014. "The Spatial Dimension of Trade- and FDI-driven Productivity Growth in Chinese Provinces: A Global Cointegration Approach," Growth and Change, Wiley Blackwell, vol. 45(2), pages 263-291, June.
    4. Cruz, Manuel David, 2023. "Labor Productivity, Real Wages, and Employment in OECD Economies," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 367-382.
    5. Taymaz, Erol & Voyvoda, Ebru & Yilmaz, Kamil, 2024. "Is there a virtuous cycle between wages and productivity? Turkish experience after the transition to democracy," World Development, Elsevier, vol. 175(C).
    6. Rawat, Pankaj S. & Sharma, Seema, 2021. "TFP growth, technical efficiency and catch-up dynamics: Evidence from Indian manufacturing," Economic Modelling, Elsevier, vol. 103(C).
    7. Diti Goswami & Sourabh Bikas Paul, 2020. "Labor Reforms in Rajasthan: A boon or a bane?," Papers 2012.01016, arXiv.org.
    8. Getahun, Tigabu D. & Fetene, Gebeyehu M. & Baumüller, Heike & Kubik, Zaneta, 2024. "Exploring the relationship between job quality and firm productivity in the manufacturing sector: Panel data evidence from Ethiopia," Discussion Papers 344125, University of Bonn, Center for Development Research (ZEF).
    9. Manuel David Cruz, 2022. "Labor productivity, real wages, and employment: evidence from a panel of OECD economies over 1960-2019," Working Papers PKWP2203, Post Keynesian Economics Society (PKES).
    10. Rath, Badri Narayan, 2018. "Productivity growth and efficiency change: Comparing manufacturing- and service-based firms in India," Economic Modelling, Elsevier, vol. 70(C), pages 447-457.
    11. Temesgen Woldamanuel Wajebo, 2024. "Determinants of Labour Demand in Manufacturing Sector in Ethiopia," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 67(3), pages 751-782, September.

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    More about this item

    Keywords

    Labour Productivity; Real Wages; Panel Unit Root Tests; Panel Cointegartion Tests; Manufacturing.;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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