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Human Capital, Labour Productivity and Employment

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  • Savita Bhat

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  • N S Siddharthan
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    Abstract

    This paper analyses the importance of human capital in determining the inter-state differences in labour productivity and its growth in India. The paper also examines the impact of human capital differences on the growth of employment for a cross section of Indian states for the period 2003- 2007. It argues that the current technology is human capital and knowledge intensive and cannot be used in the absence of skill development. Due to the presence of skill bias in the new technology, persons with less education would become victims. The panel model results of Generalised Least Squares using cross section weights show that after controlling for other determinants, variables representing human capital emerge significant determinants of productivity. Furthermore, higher enrolments in high schools not only contribute to higher labour productivity but also to higher growth in productivity. In addition, states that have higher high school enrolment rates have been enjoying higher growth rates of employment. On the whole the results presented show strong skill bias in productivity and employment growths across states.

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    Bibliographic Info

    Paper provided by eSocialSciences in its series Working Papers with number id:3110.

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    Date of creation: Nov 2010
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    Handle: RePEc:ess:wpaper:id:3110

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    Related research

    Keywords: human capital; skill development; technology; education; high school enrollments; productivity; Economics; Labour Economics;

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    1. Dibyendu S. Maiti & Arup Mitra, 2010. "Skills, Informality and Development," Working Papers id:3115, eSocialSciences.
    2. Liu, Zhiqiang, 2008. "Foreign direct investment and technology spillovers: Theory and evidence," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 176-193, February.
    3. Noorbakhsh, Farhad & Paloni, Alberto & Youssef, Ali, 2001. "Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence," World Development, Elsevier, vol. 29(9), pages 1593-1610, September.
    4. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
    5. Stephen Ross Yeaple, 2003. "The Role of Skill Endowments in the Structure of U.S. Outward Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 726-734, August.
    6. Mahrukh Doctor, 2007. "Boosting Investment and Growth: The Role of Social Pacts in the Brazilian Automotive Industry," Oxford Development Studies, Taylor & Francis Journals, vol. 35(1), pages 105-130.
    7. Paolo Epifani & Gino Gancia, 2004. "The Skill Bias of World Trade," Working Papers 184, Barcelona Graduate School of Economics.
    8. Kjell G. Salvanes & Svein Erik F¯rre, 2003. "Effects on Employment of Trade and Technical Change: Evidence from Norway," Economica, London School of Economics and Political Science, vol. 70(278), pages 293-329, 05.
    9. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    10. Ciccone, Antonio & Papaioannou, Elias, 2006. "Human capital, the structure of production, and growth," Working Paper Series 0623, European Central Bank.
    11. Audretsch, David B. & Lehmann, Erik E., 2005. "Does the Knowledge Spillover Theory of Entrepreneurship hold for regions?," Research Policy, Elsevier, vol. 34(8), pages 1191-1202, October.
    12. Gao, Ting, 2005. "Labor quality and the location of foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 16(3), pages 274-292.
    13. Rupert Harrison, 2008. "Skill-based technology adoption: firm-level evidence from Brazil and India," IFS Working Papers W08/03, Institute for Fiscal Studies.
    14. Peter J Buckley & Jeremy Clegg & Chengqi Wang, 2002. "The Impact of Inward FDI on the Performance of Chinese Manufacturing Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 33(4), pages 637-655, December.
    15. Zadia M. Feliciano, 2001. "Workers and trade liberalization: The impact of trade reforms in Mexico on wages and employment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 95-115, October.
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