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Impact of Foreign Trade on Employment and Wages in Indian Manufacturing

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  • Rajesh Raj S.N.
  • Subash Sasidharan

Abstract

This study attempts to investigate the impact of international trade on the manufacturing employment and wages in India over the period 1980–2005. Given India’s abundant labour force, the empirical evidence will provide an indication on the role of trade openness in labour market in terms of employment and wages. We employ three standard modelling approaches, namely, factor content, growth decomposition and panel data modelling approaches, to verify the role of trade on employment and wages. We use panel data at the industry level obtained from Annual Survey of Industries (ASI) and World Bank trade data set. Our results suggest that international trade has not had any significant impact on employment generation in the manufacturing sector in India. While there is little evidence on any significant effect of export orientation on employment, import penetration had a detrimental effect on employment generation.

Suggested Citation

  • Rajesh Raj S.N. & Subash Sasidharan, 2015. "Impact of Foreign Trade on Employment and Wages in Indian Manufacturing," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 16(2), pages 209-232, September.
    • Handle: RePEc:sae:soueco:v:16:y:2015:i:2:p:209-232
    DOI: 10.1177/1391561415598457
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    Cited by:

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    2. Devasmita Jena & Swati Saini, 2020. "Impact of Trade with ASEAN on India’s Employment in Industrial Sector," Working Papers 2020-190, Madras School of Economics,Chennai,India.
    3. Deb Kusum Das & Prateek Kukreja, 2020. "Value Addition, Jobs and Skills: A Study of India's Exports," Indian Council for Research on International Economic Relations (ICRIER) Working Paper 392, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    4. Sanjeev Kumar & Falguni Pattanaik & Ajay K. Singh, 2021. "Modeling Trade–Employment Elasticity Nexus: Evidence from India," Emerging Economy Studies, International Management Institute, vol. 7(1), pages 62-75, May.
    5. Hlalefang Khobai & Clement Moyo, 2021. "Trade openness and industry performance in SADC countries: is the manufacturing sector different?," International Economics and Economic Policy, Springer, vol. 18(1), pages 105-126, February.
    6. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors," Journal of South Asian Development, , vol. 15(2), pages 238-269, August.

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    More about this item

    Keywords

    International trade; manufacturing; employment; India;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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