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Economic Growth, Structural Change and Productive Employment Linkages in India

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  • Aradhna Aggarwal

Abstract

This article presents a quantitative analysis of growth, structural change and employment linkages at the aggregate level and by sector under the state- and market-led regimes in India. The underlying objectives are: (a) to understand how economic liberalization has affected the economic and labour market structures, and linkages thereof; and (b) to analyse how these dynamics have affected the generation of productive employment in the economy. The analysis is based on Shapley decompositions. Our results suggest that the contribution of structural change in employment to growth declined drastically and secularly as the country transitioned to a high-growth regime driven by globalization. The sector-level analysis indicates that employment opportunities are not being created in high-productivity sectors and segments. Thus, despite a high-growth rate in GDP per capita and productivity-enhancing structural transformation in GDP, a vast population is still trapped in employment that cannot be qualified as productive employment. The study attributes it to trade-induced economic specialization accompanied with weakening of internal inter-sectoral linkages. The article makes a strong case for strategic government intervention to broad base structural change for generating productive employment, which is at the core of poverty reduction. JEL codes: E24, O14, O4

Suggested Citation

  • Aradhna Aggarwal, 2018. "Economic Growth, Structural Change and Productive Employment Linkages in India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 64-85, March.
    • Handle: RePEc:sae:soueco:v:19:y:2018:i:1:p:64-85
    DOI: 10.1177/1391561418761074
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    1. Aggarwal, Aradhna, 2019. "How has globalisation affected the economic growth, structural change and poverty reduction linkages? Insights from international comparisons," MERIT Working Papers 2019-015, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Bhattacharya, Tulika & Bhandari, Bornali & Bairagya, Indrajit, 2020. "Where are the jobs? Estimating skill-based employment linkages across sectors for the Indian economy: An input-output analysis," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 292-308.

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    More about this item

    Keywords

    Economic growth; globalisation; employment; Shapley decomposition; structural change; India;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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