Impact of trade liberalisation on employment patterns: The experience of India’s organised manufacturing

Abstract

This study investigates the impact of trade liberalisation on employment levels at three different employment patterns in India's organised manufacturing industry. These employment patterns apply to three types of workers who face disadvantages: contract vs. regular, women vs. men, and unskilled vs. skilled. A theoretical and empirical framework linking employment patterns to trade, foreign investment, R&D intensity, and capital intensity has been developed and tested for a sample of Indian organised manufacturing industries using a panel analysis with a fixed effect model. The findings suggest that trade has a negative impact on employment overall. Imports and foreign investment have a statistically significant impact on employment levels. As a result, the government should identify industries that get a large amount of Foreign Direct Investment. International corporations have no detrimental effect on manufacturing employment in India when compared to their domestic competitors, and they pay their employees substantially more.