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Skill Sorting and Production Linkages: Evidence from India

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  • Yoko Asuyama

Abstract

Contrary to the theoretical predictions of most studies, this paper empirically shows that high‐skilled workers in India are sorted into industries with weaker production linkages. I hypothesize that such a reverse sorting pattern (negative sorting) occurs because the returns to skill become lower in industries with stronger production linkages as a result of substantial quality deterioration. Such substantial quality deterioration as the size of production linkages grows is likely to occur in developing countries such as India, which is characterized by a large pool of low‐skilled labor, poor infrastructure, and less‐advanced technology. Using both individual‐ and industry‐level data from the National Sample Surveys and input–output tables for India in 1999 and 2009, I find consistent evidence in favor of this hypothesized mechanism. The results are robust when accounting for possible endogeneity and selection biases and controlling for alternative reasons.

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  • Yoko Asuyama, 2019. "Skill Sorting and Production Linkages: Evidence from India," The Developing Economies, Institute of Developing Economies, vol. 57(2), pages 125-158, June.
    • Handle: RePEc:bla:deveco:v:57:y:2019:i:2:p:125-158
    DOI: 10.1111/deve.12193
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    Cited by:

    1. Zhenshan Yang, 2023. "Human capital space: a spatial perspective of the dynamics of people and economic relationships," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    2. Asuyama, Yoko, 2020. "Delegation to workers across countries and industries: Interacting effects of social capital and coordination needs," International Journal of Industrial Organization, Elsevier, vol. 69(C).

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