Chapter

Product Market Competition and Employment in the Organized Manufacturing sector

K. Pushpangadan and N. Shanta

in Growth, Development, and Diversity

Published in print June 2012 | ISBN: 9780198077992
Published online September 2012 | e-ISBN: 9780199081608 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198077992.003.0010
Product Market Competition and Employment in the Organized Manufacturing sector

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This chapter examines employment growth in the organized manufacturing sector in India, using a general equilibrium framework by combining the product and labour markets. The labour–output ratio shows a steady decline from 1970 to 2003, and more prominently after 1991 (post-liberalization period). The static measure of competition, the Lerner Index, of the product market and employment, both level and change, does not show any statistically significant association. A dynamic indicator of competition based on the Mueller Model of profit convergence at industry level is positively associated with employment growth. This clearly indicates the need for promoting dynamic competition in the industrial sector to increase employment growth.

Keywords: general equilibrium; employment; growth; Lerner Index; Mueller Model; competition; manufacturing; industrial sector

Chapter.  6781 words.  Illustrated.

Subjects: Economic Development and Growth

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