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Wages and Employment in the Liberalised Regime: A Study of Indian Manufacturing Sector


  • Majumder, Rajarshi


Expansion of earning opportunities and increment in earning levels are dual objectives of policymakers in developing countries. The structural adjustment programme in India tried to ensure both through higher growth targets, and manufacturing sector has seen the most sweeping changes. It is now being suggested that the current jobless growth is due to high wages. The present paper examines the veracity of this by examining the trends in employment and earnings in this sector over the nineties and analysing the factors affecting them. Most of the employment expansion has been in the unorganised sector where wages have stagnated. Though real wages in the factories have declined employment therein has not increased. Interestingly, both wages and employment have increased in the mid-sized units. The relationship is therefore neither unidirectional nor exhaustive. Proper mix of labour flexibility, resource availability, and scale economies would bring dynamism to the sector and increase both employment and earnings.

Suggested Citation

  • Majumder, Rajarshi, 2006. "Wages and Employment in the Liberalised Regime: A Study of Indian Manufacturing Sector," MPRA Paper 4851, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:4851

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    References listed on IDEAS

    1. Bhalotra, Sonia R, 1998. "The Puzzle of Jobless Growth in Indian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(1), pages 5-32, February.
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    Cited by:

    1. George, Justine, 2014. "Informal Sector in India: A Review," MPRA Paper 70602, University Library of Munich, Germany.
    2. repec:aia:aiaswp:wp90 is not listed on IDEAS
    3. Kakarlapudi, Kiran Kumar, 2010. "The Impact of Trade Liberalisation on Employment: Evidence from India’s Manufacturing Sector," MPRA Paper 35872, University Library of Munich, Germany, revised 10 Jan 2012.

    More about this item


    Wages; Employment; Manufacturing Sector; Liberalisation; India;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


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