Agrarian distress and rural non-farm sector employment in India

The rural labour market in India is still virtually, to a large extent, dominated by the agriculture related workers, both cultivators and hired workers consisting of more than 70 percent of the rural workforce even in the current decade. However, there have been signs of a shift from farm to non-farm occupations and industries during the recent times, at a magnitude relatively higher than the experience of the last three decades. This has brought in a lot of optimism among economy watchers that there is at last a visible structural shift in employment. Yet, it needs to be recognized that this shift has occurred in a period when the economy was reeling under the effects of a severe agrarian crisis. The trends and patterns in the structural shift support the argument that this has occurred mainly as a distress-driven response to the crisis. Logit and Multinomial logit analysis shows that in distress-driven regions the shift has occurred due to the push factors associated with the distress, while in the normal regions the shift has been relatively more responsive to growth driven factors.Agrarian distress; Non-farm employment; Rural; India; Push factors

The deteriorating labour market conditions and crime: An analysis of Indian states during 2001-2008

: Incidence of crime in India has been mounting at a fast pace , especially during the last decade. Moreover, crime on body seems to be increasing in comparison to crime on property. Economics and Sociology literature on crime attributes labour market as a transmitting institution for crime. This paper is an attempt to understand the issue of crime in India as a socio-economic problem with particular reference to the Indian labour market. I argue that the poor labour market conditions in the Indian economy that has been developing in the recent past may be a prime factor in explaining the spate of rise in crime rates recently. Panel data analysis of Indian states during the period 2001-2008 show that unemployment and wage inequality are key variables that explains the crime rate in India, especially crime on body. Education similarly seems to reduce property crime rate. Crime also seem to be deterred by an efficient judicial delivery system, however the role of police as a deterrent is ambiguous.Crime; wages; unemployment; India

Regional Skill Supplies and Location of Firms: The Case of Information Technology Industry in India

The “new economic geography” of the IT industry is shaped by two characteristic features of the industry, smaller size of the firms and zero transportation costs of its products that provide its ability of being a ‘footloose’ industry. The IT industry could locate itself in a region on the basis of two factors, namely, the nearness to large markets that ensures steady demand for its products, and the nearness to its factors of production. The importance of proximity to large markets in the case of Indian IT industry is only marginal as the IT industry, mainly dominated by the computer software segment, is a highly export oriented industry. There are reasons, however to believe that the location of firms in the ICT industry would be based on the supply of its crucial factor of production, namely, skilled labour. The IT industry being a skilled-labour-intensive, export-oriented industry it is by reducing the cost of labour, relative to capital, that it can reap comparative advantage benefits. Moreover, the skill requirement of this industry being very flexible and is subjected to fast rate of obsolescence it remains important for the firm, in order to have uninterrupted production, to locate itself in large pools of skilled labour. Correlations drawn between the location of firms and regional supply of skills tend to support the hypothesis that the quantity and quality of skills supplied in a region could determine the location of firms in a region and clustering of firms to a city.Skill Supply; Information Technology Industry; Location; Region; India; Economic Geography; Agglomeration Economies.

Labour Cost and Export Behaviour of Firms in Indian Textile and Clothing Industry

The implementation of the Agreement on Textile and Clothing (ATC) of the World Trade Organization (WTO) renders both threats and opportunities to India’s Textile and Clothing (T&C) industry in the wake of liberal international trade in the sector. Firms acquire greater international competitiveness through various cost cutting and efficiency enhancing strategies. The question we try to ponder on is, what route does Indian firms take to join the international export market in T&C. Empirical analysis, using Tobit estimation techniques, supported the view that increasing the share of low cost labour was an important route through which export performance of the Indian firms in T&C was enhanced. Further, the use of this means to perform better in the international market aggravated in the period after the implementation of the ATC. On the other hand, capital and technology based factors did not have any perceptive effect on the export performance of Indian firms in the international market. This endorses the view that the Indian T&C firms by and large utilized the low road to competitiveness, rather than the other. Also the importance of the import intensity in export performance suggests that Indian T&C is increasingly getting integrated within the global value chain.Export performance; Textile and clothing industry; Labour cost; Tobit Model; Agreement on Textile and Clothing

The effect of information technology on wage inequality : evidence from Indian manufacturing sector

A persistent widening of skill based wage inequality in the Indian Organised Manufacturing sector has been reported by many researchers. Two main hypotheses had been tested in developed economies to explain such a phenomenon; an inter-sectoral shift in demand structure and an intra-sectoral shift in production technology. A decomposition of the change in wage share of skilled workers showed that sector bias explained very little of the changes in the share of skilled worker wages while more than 85 percent of the changes occurred within industries, giving support to the argument of changing skill mix within industries, rather than between industries. While scale effect and capital skill complementarities do tend to give partial explanations for the increasing share of skilled worker wage share, the most consistent and quantitatively large explanation seems to appear from the effect of Information Technology intensity in the production process, whatever the specifications be. Moreover, argument of the skill biased wage inequality is only weakly supported by mere IT adoption, but it is the intensity in IT use that is the most dominant factor. However there is no evidence for an enhanced effect of IT on wage shares since the signing of the ITA agreement and the probably increased import of IT goods. Neither is there any evidence to show that technology endowed capital goods have had an impact on the changes in skill biased wage share during 1998-99 to 2004-05. Key words: Skill Biased Technological Change, Wage Inequality, Information Technology, Indian Manufacturing sector. JEL Classification: J31, L6, O3

Employment growth in rural India : distress driven?

Abstract: The 61st round of NSS shows that there is a turnaround in employment growth in rural India after a phase of ‘jobless growth’. Paradoxically, this employment growth occurred during a period of wide spread distress in agriculture sector that include low productivity, price instability and stagnation leading to indebtedness. Under the typical neoclassical tradition, this trend would have predicted further contraction of employment in the rural economy. However, further probing reveals that employment growth in the rural areas is probably a response to the crisis that is gripping the agriculture sector. Under conditions of distress, when income levels fall below sustenance then that part of the normally non-working population are forced to enter the labour market to supplement the household income. The decline of agricultural sector has also probably created forced sectoral and regional mobility of the normally working population with the normally non-working population complementing them. Key Words: Rural Employment, Gender, Rural Wages, Labour Participation, Poverty, Agrarian Distress JEL Classification: J21, J43, J3

Overseas Mergers and Acquisitions by Indian Enterprises: Patterns and Motivations

This paper examines the patterns and motivations behind the overseas M&As by Indian enterprises. It is found that a large majority of overseas M&As originated within services sector led by software industry and in overwhelming cases were directed towards developed countries of the world economy. The main motivations of Indian firm’s overseas acquisitions have been to access international market, firm-specific intangibles like technology and human skills, benefits from operational synergies, overcome constraints from limited home market growth, and survive in an increasingly competitive business environment. Further it has been found that overseas acquirers in the case of manufacturing sector tends to be large sized and research intensive, while they are older, large sized and export-oriented in the case of software sector.Indian firms; Overseas M&As

Global financial crisis and return of South Asian Gulf migrants: patterns and determinants of their integration to local labour markets

Studies record that a large number of South Asian migrant workers in the Middle–East had to return to their home countries owing to the global financial crisis and loss of jobs. However, their distress of loss of job in the gulf is compounded by the fact that in their own home countries the rehabilitation and reintegration of these workers is tedious and often the returnees are thrust with forced choices. This paper, based on a primary survey conducted in five south Asian countries, namely; Nepal, Sri Lanka, Bangladesh, Pakistan and India, concludes that on return, the employment status of REMs were in general worse off than in their host country with high share of casualisation, self employment and unemployment in the crisis year and a decline in their average monthly earnings. The analysis suggests that those who found employment on return was in fact driven by economic compulsions to reduce their job search period and cost.Global Financial Crisis; Return Migrants; South Asia; Employment; Wages

Information technology and productivity : evidence from India's manufacturing sector

While India's remarkable performance in IT software and service exports may be inspirational for other Indian industries and more so for other countries in the south, the moot question is how has India fared in terms of harnessing this technology for enhancing manufacturing productivity. This paper is an attempt at addressing this issue by analyzing an unpublished data set on the investment in computers and software at the industry level made available by the CSO. The study finds that low level of IT investment intensity in the manufacturing sector notwithstanding, IT investment does have a positive and significant impact on both partial and total factor productivity. The findings of the paper suggest that in a context wherein the policy makers are concerned with low levels of growth in manufacturing output and productivity, policy measures and institutional interventions towards promoting IT diffusion in the manufacturing sector is likely to give rich dividends. Key words: India, Information Technology, Productivity, Manufacturing Sector. JEL Classification No: L6, D24, O1

Foreign Direct Investment and Labour: The Case of Indian Manufacturing

This paper makes an attempt to evaluate the employment and wage effects of FDI in Indian manufacturing. The findings suggest that foreign firms do not have any adverse effects on the manufacturing employment in India as compared to their domestic counterparts while they significantly pay relatively higher to their workers. Therefore this study tends to imply that labour in fact had benefited from foreign investment in India.FDI; Labour; Wages; Employment