RBI Working Paper Series No. 06 Estimating Employment Elasticity of Growth for the Indian Economy

Type Working Paper - RBI Working Paper Series
Title RBI Working Paper Series No. 06 Estimating Employment Elasticity of Growth for the Indian Economy
Author(s)
Publication (Day/Month/Year) 2014
URL https://rbi.org.in/Scripts/PublicationsView.aspx?id=15763
Abstract
his paper provides updated estimates on employment elasticity - both aggregate as well as sector specific - using a variety of approaches. The aggregate employment elasticity estimates for India have declined over the decades and vary from 0.18 (arc elasticity) to 0.20 (point elasticity) during the post reform period. Sector-wise, while agriculture has witnessed negative elasticity, services including construction have generally been employment intensive. Manufacturing employment elasticity has hovered around 0.3. Within manufacturing, the employment elasticity for organized manufacturing sector based on various estimates is in the range of 0.4-0.5 for 2000s. Sectors which have been employment intensive during 2000s include wearing apparel, Furniture and Leather Products, Motor Vehicles, rubber products and Electrical Equipment. With growth moderating in 2012 and 2013, employment elasticity is likely to have lowered. Going forward, employment intensive growth is crucial for India to meet the demographic dividend challenge.

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