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Services-led growth, employment and job quality: A Study of manufacturing and service-sector in urban India

Listed author(s):
  • K.V. Ramaswamy


    (Indira Gandhi Institute of Development Research)

  • Tushar Agrawal


    (Indira Gandhi Institute of Development Research)

This is a study of employment growth, structure, and job quality outcomes in manufacturing and service-sector in urban India spanning the period 1999-2000 to 2009-10. The context is that of dynamic growth of service-sector in India beginning in the 1990s. This has raised the question whether India will skip the traditional sequence of agriculture to manufacturing with services taking up the leading sector role in India's growth path. We studied employment growth and related aspects of employment structure using the NSS surveys of employment and unemployment carried out in 1999-2000 and 2009-10 with a view to throw more light on the future role of manufacturing and services as providers of employment to large numbers joining the labour force. We did not find any acceleration in the service-sector employment growth relative to manufacturing in the urban areas of India. The good news is that young males have increased their share of regular employment both in manufacturing and services. However, we find greater duality in services sector in terms of the incidence of informality and wage inequality. In the service-sector those with more skills have received higher increases in real wage. The service-sector is relatively more skill demanding than manufacturing. We showed that skill composition of the workforce is markedly different between the two sectors with services clearly skill biased. Social security conditions are not found to be relatively much superior in services. Our results strongly suggest that service-sector is an unlikely destination for the millions of low skilled job seekers. India needs to focus on manufacturing sector to provide large scale employment.

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Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2012-007.

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Length: 27 pages
Date of creation: Mar 2012
Handle: RePEc:ind:igiwpp:2012-007
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  1. Kijima, Yoko, 2006. "Why did wage inequality increase? Evidence from urban India 1983-99," Journal of Development Economics, Elsevier, vol. 81(1), pages 97-117, October.
  2. Barry Bosworth & Susan M. Collins & Arvind Virmani, 2006. "Sources of Growth in the Indian Economy," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 1-69.
  3. Tushar Agrawal, 2011. "Returns to education in India: Some recent evidence," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-017, Indira Gandhi Institute of Development Research, Mumbai, India.
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