The Productivity-Wage and Productivity-Employment Nexus: A Panel Data Analysis of Indian Manufacturing

Posted: 7 Jun 2012

See all articles by Mita Bhattacharya

Mita Bhattacharya

Monash University - Department of Economics

Paresh Kumar Narayan

Deakin University - School of Accounting, Economics and Finance

Date Written: 2011

Abstract

This article investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973-1974 to 1999-2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labour market has a significant influence on manufacturing productivity, employment and real wages in the case of Indian manufacturing

Suggested Citation

Bhattacharya, Mita and Narayan, Paresh Kumar, The Productivity-Wage and Productivity-Employment Nexus: A Panel Data Analysis of Indian Manufacturing (2011). Empirical Economics, Vol. 40, pp. 285-305, 2011, Available at SSRN: https://ssrn.com/abstract=2079320

Mita Bhattacharya

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3168
Australia

Paresh Kumar Narayan (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

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