Output and labor productivity in organized manufacturing: a panel cointegration analysis for India

Bhattacharya, Mita and Narayan, Paresh 2015, Output and labor productivity in organized manufacturing: a panel cointegration analysis for India, International journal of production economics, vol. 170, no. Part A, pp. 171-177, doi: 10.1016/j.ijpe.2015.09.020.

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Title Output and labor productivity in organized manufacturing: a panel cointegration analysis for India
Author(s) Bhattacharya, Mita
Narayan, PareshORCID iD for Narayan, Paresh orcid.org/0000-0001-7934-8146
Journal name International journal of production economics
Volume number 170
Issue number Part A
Start page 171
End page 177
Total pages 7
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2015-12
ISSN 0925-5273
Keyword(s) Labor productivity
Real wages
Panel unit root tests
Cross-sectional dependence and Indian manufacturing
Science & Technology
Engineering, Industrial
Engineering, Manufacturing
Operations Research & Management Science
Summary One of the policy puzzles faced in India during the last two and half decades has been the weak association between output and labor markets, particularly in the manufacturing sector. In this research, we investigate the long-run relationship between output, labor productivity and real wages in the case of organized manufacturing. We adjust the measure of labor productivity incorporating bottlenecks, such as lack of infrastructure, access to external finance, and labor regulations, which all may influence labor market outcomes. Using panel data from seventeen manufacturing industries, we establish long-run dynamics for the output-labor productivity-real wages series over a period of nearly three decades. We employ recently developed panel unit root and cointegration tests for cross-sectional dependence to incorporate heterogeneity across industries. Long-run elasticities are generally found to be low for labor productivity compared to real wages due to the changes in manufacturing output. There are variations across industries within the manufacturing sector for the effects of the labor market on manufacturing output. In some industries, lower wages are associated with higher output, and the reason for the positive relationship in other industries could be due to workers' bargaining power.
Language eng
DOI 10.1016/j.ijpe.2015.09.020
Field of Research 150202 Financial Econometrics
MD Multidisciplinary
Socio Economic Objective 910103 Economic Growth
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2015, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30084999

Document type: Journal Article
Collections: Faculty of Business and Law
2018 ERA Submission
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