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The Impact of Trade Liberalisation on Employment: Evidence from India’s Manufacturing Sector

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  • Kakarlapudi, Kiran Kumar

Abstract

The Opening up of the economy brought in phenomenal changes in various dimensions of the economy. The growth performance of the Indian economy, though not spectacular, has been decent by the standards of developing countries after initiation of economic reforms. There has been a great debate in academia that the growth was not accompanied by an increase in employment growth. Stagnant growth in employment with impressive economic performance during last two decades is termed as “jobless growth”. Since the manufacturing employment has been subject to sweeping changes in the post reform period, this paper attempts to examine the possible impact of trade liberalisation on the growth of organised manufacturing employment at two digit levels by dividing industries into export oriented and import competing industries. Both the overall and manufacturing employment trends shows that there is a reduction in employment growth in the post- liberalisation period compare to the pre-liberalisation period. It is further found that deceleration of employment growth in the import competing industries is higher than export competing industries and that; trade liberalisation did not create any growth in employment through scale effect.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35872.

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Date of creation: 18 Apr 2010
Date of revision: 10 Jan 2012
Handle: RePEc:pra:mprapa:35872

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Keywords: Trade liberalisation; Manufacturing sector; Employment;

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  1. Peter R. Fallon & Robert E. B. Lucas, 1989. "Job Security Regulations and the Dynamic Demand for Industrial Labor in India and Zimbabwe," Boston University - Institute for Economic Development, Boston University, Institute for Economic Development 2, Boston University, Institute for Economic Development.
  2. Majumder, Rajarshi, 2006. "Wages and Employment in the Liberalised Regime: A Study of Indian Manufacturing Sector," MPRA Paper 4851, University Library of Munich, Germany.
  3. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 106(2), pages 369-405, May.
  4. Rashmi Banga, 2007. "Impact of Liberalisation on Wages and Employment in Indian Manufacturing Industries," Working Papers id:989, eSocialSciences.
  5. Montek S. Ahluwalia, 2002. "Economic Reforms in India Since 1991: Has Gradualism Worked?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(3), pages 67-88, Summer.
  6. Rana Hasan & Devashish Mitra & K.V. Ramaswamy, 2007. "Trade Reforms, Labor Regulations, and Labor-Demand Elasticities: Empirical Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 466-481, August.
  7. Bhalotra, Sonia R, 1998. "The Puzzle of Jobless Growth in Indian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 60(1), pages 5-32, February.
  8. Bishwanath GOLDAR & Suresh Chand AGGARWAL, 2005. "Trade Liberalization And Price-Cost Margin In Indian Industries," The Developing Economies, Institute of Developing Economies, Institute of Developing Economies, vol. 43(3), pages 346-373, 09.
  9. Mauricio Mesquita Moreira & Sheila Najberg, 2000. "Trade liberalisation in Brazil: Creating or exporting jobs?," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(3), pages 78-99.
  10. Milner, Chris & Wright, Peter, 1998. "Modelling Labour Market Adjustment to Trade Liberalisation in an Industrialising Economy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(447), pages 509-28, March.
  11. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  12. Rattso, Jorn & Torvik, Ragnar, 1998. "Zimbabwean Trade Liberalisation: Ex Post Evaluation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 22(3), pages 325-46, May.
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