How Do Trade, Foreign Investment, and Technology Affect Employment Patterns in Organized Indian Manufacturing?

Pradhan, Jaya Prakash (2005): How Do Trade, Foreign Investment, and Technology Affect Employment Patterns in Organized Indian Manufacturing? Published in: Indian Journal of Labour Economics , Vol. 49, No. 2 (2006): pp. 249-272.

Abstract

The present study investigates into the impact of trade, foreign investment, and technology on three different employment patterns in India’s organized manufacturing sector. These employment patterns cover three disadvantage categories of workers viz., women vis-à-vis men workers, contract vis-à-vis regular workers and unskilled vis-à-vis skilled workers. A conceptual and empirical framework has been developed linking these employment patterns to trade, foreign investment, and technology, and tested for a sample of Indian industries. The research suggests that trade has been employment promoting for women and unskilled workers while it has remain neutral between contract and regular workers. The impact of foreign investment has been observed to be negative for contract and unskilled workers. The overall impact of technology encompassing in-house R&D, foreign technology imports, and capital-intensity has been mostly negative for women and unskilled workers but positive for contract workers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Employment Patterns; Trade; Foreign Investment; Technology
• Subjects: F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements

References

Acemoglu, D. (2002) ‘Directed Technical Change’, Review of Economic Studies, 69 (4), pp. 781-809.

Agarwal, J. P. (1976) ‘Factor Proportions in Foreign and Domestic Owned Firms in Indian Manufacturing’, Economic Journal, 86, pp. 529-595.

Banga, R (2005) ‘Impact of liberalization on wages and employment in Indian manufacturing industries’, ICRIER Working Paper, No. 153.

Berman, E. and S. Machin (2000) ‘Skill-Biased Technology Transfer Around the World’, Oxford Review of Economic Policy, 16(3), pp. 12-22.

Berman, E., J. Bound, and S. Machin (1998) ‘Implications of Skill-Biased Technological Change: International Evidence’, Quarterly Journal of Economics, 113 (4), pp. 1245-1280.

Cook, R. D. (1977) ‘Detection of influential observations in linear regression’, Technometrics, 19 (1), pp. 15–18.

Currie, J. and A. Harrison (1997) ‘Trade Reform and Labor Market Adjustment in Morocco’, Journal of Labor Economics, 15, pp. S44-S71.

Doms, M. and J. B. Jensen (1998) ‘Comparing Wages, Skills, and Productivity Between Domestically and Foreign-Owned Manufacturing Establishments in the United States’, in Baldwin, R. E., R. E. Lipsey, and J. D. Richardson, eds. (1998) Geography and Ownership as Bases for Economic Accounting, Chicago: University of Chicago Press.

Driffield, N. and K. Taylor (2000) ‘FDI and the Labour Market: A Review of the Evidence and Policy Implications’, Oxford Review of Economic Policy, 16 (3), pp. 90-103.

Feenstra, R. C. and G. H. Hanson (1999) ‘The Impact of Outsourcing and High-Technology Capital on Wages: Estimates for the United States 1979-1990’, Quarterly Journal of Economics, 114 (3), pp. 907-940.

Fontana, M. (2003) ‘The gender effects of trade liberalization in developing countries: a review of the literature’, Discussion Papers in Economics, No. DP 101, University of Sussex.

Goldar, B. (2002) ‘Trade liberalization and manufacturing employment: The case of India’, Employment Paper, No. 2002/34, ILO.

Goldin, C. and L.F. Katz (1998) ‘The Origins of Technology-Skill Complementarity’, Quarterly Journal of Economics, 113 (3), pp. 693-732.

Hymer, S. (1960) The international operations of national firms: a study of direct foreign investment. PhD Dissertation, Massachusetts Institute of Technology, Massachusetts: MIT Press (1976).

Jenkins, R (1990), “Comparing Foreign Subsidiaries and Local Firms in LDCs: Theoretical Issues and Empirical Evidences”, The Journal of Development Studies, 26, pp.205-228.

Kucera, D. (2001) ‘Foreign Trade of Manufactures and Men and Women's Employment and Earnings in Germany and Japan’, International Review of Applied Economics, 15(2), pp. 129-49.

Lawrence, R. Z. and M. J. Slaughter (1993) ‘International Trade and American Wages in the 1980s: Giant Sucking Sound or Small Hiccup?’, Brookings Papers on Economic Activity: Microeconomics, 2, pp. 161-210.

Lee, C and G. Schluter (1999) ‘Effect of Trade on the Demand for Skilled and Unskilled Workers’, Economic Systems Research, 11(1), pp. 49-65.

Okada, A. (2004) ‘Skills Development and Interfirm Learning Linkages under Globalization: Lessons from the Indian Automobile Industry’, World Development, 32 (7), pp. 1265–1288.

Oscarsson, E. (2000) ‘Trade, Employment and Wages in Sweden 1975-93’, Research Papers in Economics, No. 2000:8, Stockholm University, Department of Economics.

Pradhan, J.P., Abraham, V. and Sahoo, M. K. (2004) ‘Foreign Direct Investment and Labour: The Case of Indian Manufacturing’, Labour & Development, 10 (1), pp. 58-79.

Revenga, A. (1995) ‘Employment and wage effects of trade liberalization: the case of Mexican manufacturing’, Policy Research Working Papers, No. 1524, The World Bank.

Robertson, R. (2004) ‘Relative Prices and Wage Inequality: Evidence from Mexico’, Journal of International Economics, 64(2), pp. 387-409.

Sachs, Jeffrey D. and Howard J. Shatz (1994) ‘Trade and Jobs in U.S. Manufacturing’, Brookings Papers on Economic Activity, 1, pp. 1-84.

Sánchez-Páramo, C. and N. Schady (2003) ‘Off and Running? Technology, Trade, and the Rising Demand for Skilled Workers in Latin America’, Policy Research Working Paper, No. 3015, The World Bank.

Singh, S. P. and R. K. Agarwal (1999) ‘Trade technology employment interface: Evidence from Indian industries’, Indian Journal of Labour Economics, 42(4), pp. 919-934.

Unni, J and U. Rani (2005) ‘Technical change and workforce in India: skill biased growth?’, Indian Journal of Labour Economics, 47(4 ), pp. 683-692.