Impact of Foreign Trade on Employment and Wages in Indian Manufacturing

摘要

This study attempts to investigate the impact of international trade on the manufacturing employment and wages in India over the period 1980-2005. Given India's abundant labour force, the empirical evidence will provide an indication on the role of trade openness in labour market in terms of employment and wages. We employ three standard modelling approaches, namely, factor content, growth decomposition and panel data modelling approaches, to verify the role of trade on employment and wages. We use panel data at the industry level obtained from Annual Survey of Industries (ASI) and World Bank trade data set. Our results suggest that international trade has not had any significant impact on employment generation in the manufacturing sector in India. While there is little evidence on any significant effect of export orientation on employment, import penetration had a detrimental effect on employment generation.