Pub Date : 2019-12-19DOI: 10.1108/igdr-05-2019-0044
Yashobanta Parida, D. Dash
Purpose The purpose of this paper is to evaluate the effect of floods and the role of financial development on per capita gross state domestic product (GSDP) growth, controlling for growth-enhancing factors across Indian states. Design/methodology/approach The paper uses the pooled mean group (PMG) method using state-level panel data for 19 Indian states over the period 1981-2011. Findings The PMG estimate shows that floods negatively affect the per capita GSDP growth in the long run. The results show that the mean of economic losses, the population affected and the area affected by floods increase by 10 per cent, leading to a decline in per capita GSDP growth by 0.0303, 0.0633 and 0.0232 per cent, respectively, in the long run. Furthermore, the population affected by floods exerts a higher adverse impact on the per capita GSDP growth compared to other flood measures. The results further show that states with better financial development experience a higher per capita GSDP growth, supported by additional capital expenditure, enrolment in higher education, better road infrastructure and higher urbanization. The crime rate is negatively correlated with per capita GSDP growth. Originality/value The results based on PMG estimates suggest that not only floods but also crime activities adversely affect the per capita GSDP growth across Indian states. Better financial market increases the per capita GSDP growth in the long run. This study not only contributes to empirical growth literature but also provides some useful policy suggestions. Moreover, the results lead to the conclusion that long-term flood management policies are essential to mitigate the adverse impact of floods on per capita GSDP growth across Indian states.
{"title":"Rethinking the effect of floods and financial development on economic growth","authors":"Yashobanta Parida, D. Dash","doi":"10.1108/igdr-05-2019-0044","DOIUrl":"https://doi.org/10.1108/igdr-05-2019-0044","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to evaluate the effect of floods and the role of financial development on per capita gross state domestic product (GSDP) growth, controlling for growth-enhancing factors across Indian states.\u0000\u0000\u0000Design/methodology/approach\u0000The paper uses the pooled mean group (PMG) method using state-level panel data for 19 Indian states over the period 1981-2011.\u0000\u0000\u0000Findings\u0000The PMG estimate shows that floods negatively affect the per capita GSDP growth in the long run. The results show that the mean of economic losses, the population affected and the area affected by floods increase by 10 per cent, leading to a decline in per capita GSDP growth by 0.0303, 0.0633 and 0.0232 per cent, respectively, in the long run. Furthermore, the population affected by floods exerts a higher adverse impact on the per capita GSDP growth compared to other flood measures. The results further show that states with better financial development experience a higher per capita GSDP growth, supported by additional capital expenditure, enrolment in higher education, better road infrastructure and higher urbanization. The crime rate is negatively correlated with per capita GSDP growth.\u0000\u0000\u0000Originality/value\u0000The results based on PMG estimates suggest that not only floods but also crime activities adversely affect the per capita GSDP growth across Indian states. Better financial market increases the per capita GSDP growth in the long run. This study not only contributes to empirical growth literature but also provides some useful policy suggestions. Moreover, the results lead to the conclusion that long-term flood management policies are essential to mitigate the adverse impact of floods on per capita GSDP growth across Indian states.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":"1 1","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/igdr-05-2019-0044","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"62547056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-14DOI: 10.1108/igdr-11-2018-0117
B. Goldar
Purpose The purpose of this paper is to analyse econometrically determinants of total factor productivity (TFP) in Indian manufacturing plants with a focus on the influence of services input on productivity. Design/methodology/approach Plant-level data drawn from Annual Survey of Industries for the years 1998-1999 to 2012-2013 are used for the estimation of TFP at plant-level by applying the Levinsohn–Petrin methodology. Econometric models are estimated to explain variations in plant-level TFP. The explanatory variables used are services input intensity (split into manufacturing services purchased and other services), the share of information communication technology (ICT) assets in total fixed capital stock, the share of contract workers in total workers and the share of imported materials out of total materials used, with plant size taken as a control variable. Model estimation is done by applying the fixed effects model. Findings Econometric results indicate that services input and ICT intensity have a significant positive effect on productivity of manufacturing plants in India. Use of imported materials raises productivity, whereas the use of contract workers in place of regular workers tends to lower productivity. The impact of imported materials on TFP of manufacturing plants seems to be relatively bigger for labour-intensive, low technology industries. Originality/value Care has been taken for TFP measurement. Analysis of the impact of services input on TFP has been undertaken for Indian manufacturing using plant-level data for the first time.
{"title":"Services input and productivity in Indian manufacturing plants","authors":"B. Goldar","doi":"10.1108/igdr-11-2018-0117","DOIUrl":"https://doi.org/10.1108/igdr-11-2018-0117","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to analyse econometrically determinants of total factor productivity (TFP) in Indian manufacturing plants with a focus on the influence of services input on productivity.\u0000\u0000\u0000Design/methodology/approach\u0000Plant-level data drawn from Annual Survey of Industries for the years 1998-1999 to 2012-2013 are used for the estimation of TFP at plant-level by applying the Levinsohn–Petrin methodology. Econometric models are estimated to explain variations in plant-level TFP. The explanatory variables used are services input intensity (split into manufacturing services purchased and other services), the share of information communication technology (ICT) assets in total fixed capital stock, the share of contract workers in total workers and the share of imported materials out of total materials used, with plant size taken as a control variable. Model estimation is done by applying the fixed effects model.\u0000\u0000\u0000Findings\u0000Econometric results indicate that services input and ICT intensity have a significant positive effect on productivity of manufacturing plants in India. Use of imported materials raises productivity, whereas the use of contract workers in place of regular workers tends to lower productivity. The impact of imported materials on TFP of manufacturing plants seems to be relatively bigger for labour-intensive, low technology industries.\u0000\u0000\u0000Originality/value\u0000Care has been taken for TFP measurement. Analysis of the impact of services input on TFP has been undertaken for Indian manufacturing using plant-level data for the first time.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/igdr-11-2018-0117","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45147005","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-14DOI: 10.1108/igdr-01-2019-0014
S. Lahiri, Valerica Vlad
Purpose This paper aims to examine the role of outside peacekeepers in a bilateral conflict. Design/methodology/approach The authors build upon a trade theoretic framework by incorporating disruptions due to war, which could affect directly the return to investment, both domestic and foreign, and by introducing explicitly peacekeeping forces into the model. Two countries are engaged in a war, with the purpose of capturing capital. A third country plays a dual role: it is the source of investments in the warring countries, and it deploys soldiers on ground for peacekeeping purposes. The authors consider the cases where the levels of foreign investments are exogenous and when they are endogenously determined by free mobility conditions. In the worst case, they find that foreign investment reduces conflict. In the case of endogenous foreign investments, they examine the effect of multilateral agreements where the two warring countries reduce their number of soldiers and the third increases the number of peacekeepers. Findings The authors find that the reform benefits all three countries and increases the level of foreign investments. They consider the cases of exogenous and endogenous foreign direct investment (FDI). In the first case, the authors examine the effect of an exogenous increase in FDI on the war equilibrium and find that it reduces the employment of soldiers in the warring countries and increases the size of the peacekeeping force. They also find that the first-best level of peacekeeping is larger than the equilibrium level. When FDI is endogenous, starting from the initial war equilibrium, they also examine the effect of a multilateral agreement in which the size of the peacekeeping force is increased by the third country and the two warring countries agree to reduce their war efforts. The authors find that the reform makes all three countries better off and increases the level of FDI. Originality/value The paper uses a theoretical model with third-party interventions in a bilateral war. It intends to shed light on some of the missing economic implications of peacekeeping. The paper introduces explicitly peacekeeping forces into the analysis and introduces a factor that represents a disruption to return on investment in both warring countries. The third country has a dual role; it provides investments in the warring countries and deploys soldiers for peacekeeping. Peacekeeping reduces the disruption mentioned above and affects the employment of soldiers by the warring countries. The authors find that a multilateral agreement in which the two warring countries reduce their war efforts and the third party increases its peacekeeping force can increase welfare in all three countries.
{"title":"Peace keeping in a model of conflict with foreign investments","authors":"S. Lahiri, Valerica Vlad","doi":"10.1108/igdr-01-2019-0014","DOIUrl":"https://doi.org/10.1108/igdr-01-2019-0014","url":null,"abstract":"\u0000Purpose\u0000This paper aims to examine the role of outside peacekeepers in a bilateral conflict.\u0000\u0000\u0000Design/methodology/approach\u0000The authors build upon a trade theoretic framework by incorporating disruptions due to war, which could affect directly the return to investment, both domestic and foreign, and by introducing explicitly peacekeeping forces into the model. Two countries are engaged in a war, with the purpose of capturing capital. A third country plays a dual role: it is the source of investments in the warring countries, and it deploys soldiers on ground for peacekeeping purposes. The authors consider the cases where the levels of foreign investments are exogenous and when they are endogenously determined by free mobility conditions. In the worst case, they find that foreign investment reduces conflict. In the case of endogenous foreign investments, they examine the effect of multilateral agreements where the two warring countries reduce their number of soldiers and the third increases the number of peacekeepers.\u0000\u0000\u0000Findings\u0000The authors find that the reform benefits all three countries and increases the level of foreign investments. They consider the cases of exogenous and endogenous foreign direct investment (FDI). In the first case, the authors examine the effect of an exogenous increase in FDI on the war equilibrium and find that it reduces the employment of soldiers in the warring countries and increases the size of the peacekeeping force. They also find that the first-best level of peacekeeping is larger than the equilibrium level. When FDI is endogenous, starting from the initial war equilibrium, they also examine the effect of a multilateral agreement in which the size of the peacekeeping force is increased by the third country and the two warring countries agree to reduce their war efforts. The authors find that the reform makes all three countries better off and increases the level of FDI.\u0000\u0000\u0000Originality/value\u0000The paper uses a theoretical model with third-party interventions in a bilateral war. It intends to shed light on some of the missing economic implications of peacekeeping. The paper introduces explicitly peacekeeping forces into the analysis and introduces a factor that represents a disruption to return on investment in both warring countries. The third country has a dual role; it provides investments in the warring countries and deploys soldiers for peacekeeping. Peacekeeping reduces the disruption mentioned above and affects the employment of soldiers by the warring countries. The authors find that a multilateral agreement in which the two warring countries reduce their war efforts and the third party increases its peacekeeping force can increase welfare in all three countries.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/igdr-01-2019-0014","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48075599","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/igdr-06-2019-0056
Izza Aftab, Umair Mazher
Purpose The paper aims to identify the determinants of employment in Pakistan. In light of the jobless growth Pakistan has experienced starting from 2000, this is a valid concern. The paper discusses the structural relationship between employment and growth in Pakistan and analyzes it empirically within an economic geography framework. Design/methodology/approach The paper applies a Logit regression analysis to data from Pakistan Social and Living Standard Measurement Survey for the years 2010, 2012 and 2014. While this survey is published annually, the paper uses data at the district level, which is available only every alternate year. Data are collected at the individual level and can be mapped back to the household level. Each wave of data covers at least 70,000 households. The survey provides data on employment status, health, education, sanitation, economic situation and asset ownership. The analysis is conducted using Stata. The paper uses computer vision to present and trace changing employment patterns in Pakistan over time. To do so, the paper uses MATLAB. The data are transformed to KMV format and the plotting is done using Google Earth. Findings The paper shows how household characteristics affect the odds of employment in Pakistan, finding evidence of provincial disparities. Moreover, the paper shows that non-wage income from assets reduces the odds of being employed. The paper identifies the various income thresholds for the five income sources examined to have an impact on the odds of employment. Originality/value The novelty of this research is the identification of the determinants of employment in Pakistan and their analysis from the perspective of economic geography. This paper should be useful for policymakers and international financial organizations concerned with structural change in Pakistan.
{"title":"Determining the odds of employment in Pakistan","authors":"Izza Aftab, Umair Mazher","doi":"10.1108/igdr-06-2019-0056","DOIUrl":"https://doi.org/10.1108/igdr-06-2019-0056","url":null,"abstract":"\u0000Purpose\u0000The paper aims to identify the determinants of employment in Pakistan. In light of the jobless growth Pakistan has experienced starting from 2000, this is a valid concern. The paper discusses the structural relationship between employment and growth in Pakistan and analyzes it empirically within an economic geography framework.\u0000\u0000\u0000Design/methodology/approach\u0000The paper applies a Logit regression analysis to data from Pakistan Social and Living Standard Measurement Survey for the years 2010, 2012 and 2014. While this survey is published annually, the paper uses data at the district level, which is available only every alternate year. Data are collected at the individual level and can be mapped back to the household level. Each wave of data covers at least 70,000 households. The survey provides data on employment status, health, education, sanitation, economic situation and asset ownership. The analysis is conducted using Stata. The paper uses computer vision to present and trace changing employment patterns in Pakistan over time. To do so, the paper uses MATLAB. The data are transformed to KMV format and the plotting is done using Google Earth.\u0000\u0000\u0000Findings\u0000The paper shows how household characteristics affect the odds of employment in Pakistan, finding evidence of provincial disparities. Moreover, the paper shows that non-wage income from assets reduces the odds of being employed. The paper identifies the various income thresholds for the five income sources examined to have an impact on the odds of employment.\u0000\u0000\u0000Originality/value\u0000The novelty of this research is the identification of the determinants of employment in Pakistan and their analysis from the perspective of economic geography. This paper should be useful for policymakers and international financial organizations concerned with structural change in Pakistan.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/igdr-06-2019-0056","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45122660","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/igdr-11-2018-0125
M. Gupta, P. Dutta
Purpose International tourism has experienced a substantial growth during the second half of twentieth century. Tourism development can contribute substantially to the reduction of poverty problem by creating new employment opportunities. The purpose of this paper is to analyse the effect of tourism development on unemployment problem using an efficiency wage framework. Design/methodology/approach The authors developed a two-sector two-factor static competitive general equilibrium model of a less-developed open economy called South with an imported traded goods sector and with a non-traded tourism service sector, and with two factors, capital and labour. Labour is measured in efficiency unit; there exists unemployment in the labour market which is explained by the efficiency wage hypothesis. The authors also consider extensions of the basic model by introducing an exportable traded goods sector as well as sector-specific capital in the tourism sector. Findings The authors show that, with perfect intersectoral mobility of capital and with only one traded good, tourism development in South lowers unemployment rate and raises national income. However, this tourism development neither affects unemployment rate nor national income in South, in the mobile-capital model when there are two traded goods. When tourism sector uses sector-specific capital but capital is mobile between two traded goods sectors, tourism development keeps the unemployment rate unchanged but raises national income in South. Originality/value There exists a lot of debate about economic benefits of tourism development in a less-developed economy. A few works analyse the economic effects of tourism without developing formal models. However, no existing work analyses the effect on unemployment in an efficiency wage model. Although Harris–Todaro model is of relevance to explain unemployment in low-income countries, efficiency wage models are relevant for middle-income countries.
{"title":"Efficiency wage, unemployment and tourism development: a theoretical analysis","authors":"M. Gupta, P. Dutta","doi":"10.1108/igdr-11-2018-0125","DOIUrl":"https://doi.org/10.1108/igdr-11-2018-0125","url":null,"abstract":"\u0000Purpose\u0000International tourism has experienced a substantial growth during the second half of twentieth century. Tourism development can contribute substantially to the reduction of poverty problem by creating new employment opportunities. The purpose of this paper is to analyse the effect of tourism development on unemployment problem using an efficiency wage framework.\u0000\u0000\u0000Design/methodology/approach\u0000The authors developed a two-sector two-factor static competitive general equilibrium model of a less-developed open economy called South with an imported traded goods sector and with a non-traded tourism service sector, and with two factors, capital and labour. Labour is measured in efficiency unit; there exists unemployment in the labour market which is explained by the efficiency wage hypothesis. The authors also consider extensions of the basic model by introducing an exportable traded goods sector as well as sector-specific capital in the tourism sector.\u0000\u0000\u0000Findings\u0000The authors show that, with perfect intersectoral mobility of capital and with only one traded good, tourism development in South lowers unemployment rate and raises national income. However, this tourism development neither affects unemployment rate nor national income in South, in the mobile-capital model when there are two traded goods. When tourism sector uses sector-specific capital but capital is mobile between two traded goods sectors, tourism development keeps the unemployment rate unchanged but raises national income in South.\u0000\u0000\u0000Originality/value\u0000There exists a lot of debate about economic benefits of tourism development in a less-developed economy. A few works analyse the economic effects of tourism without developing formal models. However, no existing work analyses the effect on unemployment in an efficiency wage model. Although Harris–Todaro model is of relevance to explain unemployment in low-income countries, efficiency wage models are relevant for middle-income countries.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/igdr-11-2018-0125","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44894692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/igdr-07-2018-0077
V. Abraham
Purpose This paper aims to analyse the observed “jobless growth” between 1993-1994 and 2011-2012 based on structural transformation to explain why the elasticity of employment generation to gross domestic product growth has declined during this period. Design/methodology/approach This paper uses the job generation and growth decomposition tool to quantify the effects of inter-sectoral mobility of workers, intra-sectoral productivity changes and demographic changes on per capita value added growth. Alternative scenarios are generated to simulate the effect of higher female labour participation rates. Findings Structural transformation in India between 1993-1994 and 2011-2012 was characterised by increasing labour productivity in most sectors, inter-sectoral mobility of workers and a decline in the employment rate. About 81 per cent of the increase in per capita value added was because of a rise in labour productivity; about 24 per cent was because of inter-sectoral shifts of labour; and about 9 per cent because of demographic changes. The decline in the employment rate had a negative effect of −14.20 per cent. The process of transformation was unconventional. First, labour productivity growth was the highest in the service sector and second, the bulk of the movement of labour was to the construction sector. Research limitations/implications This paper focusses only on the quantitative dimensions of employment and offers no new explanations why female labour force participation declined. Originality/value This paper offers a new perspective on the debate of jobless growth focussing on structural transformation.
{"title":"Jobless growth through the lens of structural transformation","authors":"V. Abraham","doi":"10.1108/igdr-07-2018-0077","DOIUrl":"https://doi.org/10.1108/igdr-07-2018-0077","url":null,"abstract":"\u0000Purpose\u0000This paper aims to analyse the observed “jobless growth” between 1993-1994 and 2011-2012 based on structural transformation to explain why the elasticity of employment generation to gross domestic product growth has declined during this period.\u0000\u0000\u0000Design/methodology/approach\u0000This paper uses the job generation and growth decomposition tool to quantify the effects of inter-sectoral mobility of workers, intra-sectoral productivity changes and demographic changes on per capita value added growth. Alternative scenarios are generated to simulate the effect of higher female labour participation rates.\u0000\u0000\u0000Findings\u0000Structural transformation in India between 1993-1994 and 2011-2012 was characterised by increasing labour productivity in most sectors, inter-sectoral mobility of workers and a decline in the employment rate. About 81 per cent of the increase in per capita value added was because of a rise in labour productivity; about 24 per cent was because of inter-sectoral shifts of labour; and about 9 per cent because of demographic changes. The decline in the employment rate had a negative effect of −14.20 per cent. The process of transformation was unconventional. First, labour productivity growth was the highest in the service sector and second, the bulk of the movement of labour was to the construction sector.\u0000\u0000\u0000Research limitations/implications\u0000This paper focusses only on the quantitative dimensions of employment and offers no new explanations why female labour force participation declined.\u0000\u0000\u0000Originality/value\u0000This paper offers a new perspective on the debate of jobless growth focussing on structural transformation.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/igdr-07-2018-0077","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44817906","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/IGDR-06-2018-0065
Chetan Ghate, Debojyoti Mazumder
Purpose Governments in both developing and developed economies play an active role in labor markets in the form of providing both formal public sector jobs and employment through public workfare programs. The authors refer to this as employment targeting. The purpose of the paper is to consider different labor market effects of employment targeting in a stylized model of a developing economy. In the context of a simple search and matching friction model, the authors show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector. Design/methodology/approach The model is an application of a search and matching model of labor market frictions, where agents have heterogeneous abilities. The authors introduce a public sector alongside the private sector in the economy. Wage in the private sector is determined through Nash bargaining, whereas the public sector wage is exogenously fixed. In this setup, the public sector hiring rate influences private sector job creation and hence the overall employment rate of the economy. As an extension, the authors model the informal sector coupled with the other two sectors. This resembles developing economies. Then, the authors check the overall labor market effects of employment targeting through public sector intervention. Findings In the context of a simple search and matching friction model with heterogeneous agents, the authors show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector. Employment targeting can, therefore, have perverse effects on labor market outcomes. The authors also find that it is possible that the private sector wage falls as a result of an increase in the public sector hiring rate, which leads to more job creation in the private sector. Originality/value What is less understood in the literature is the impact of employment targeting on the size of the informal sector in developing economies. The authors fill this gap and show that public sector intervention can have perverse effects on overall job creation and the size of the informal sector. Moreover, a decrease in the private sector wage due to a rise in public sector hiring reverses the consensus findings in the search and matching literature which show that an increase in public sector employment disincentivizes private sector vacancy postings.
{"title":"Employment targeting in a frictional labor market","authors":"Chetan Ghate, Debojyoti Mazumder","doi":"10.1108/IGDR-06-2018-0065","DOIUrl":"https://doi.org/10.1108/IGDR-06-2018-0065","url":null,"abstract":"\u0000Purpose\u0000Governments in both developing and developed economies play an active role in labor markets in the form of providing both formal public sector jobs and employment through public workfare programs. The authors refer to this as employment targeting. The purpose of the paper is to consider different labor market effects of employment targeting in a stylized model of a developing economy. In the context of a simple search and matching friction model, the authors show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector.\u0000\u0000\u0000Design/methodology/approach\u0000The model is an application of a search and matching model of labor market frictions, where agents have heterogeneous abilities. The authors introduce a public sector alongside the private sector in the economy. Wage in the private sector is determined through Nash bargaining, whereas the public sector wage is exogenously fixed. In this setup, the public sector hiring rate influences private sector job creation and hence the overall employment rate of the economy. As an extension, the authors model the informal sector coupled with the other two sectors. This resembles developing economies. Then, the authors check the overall labor market effects of employment targeting through public sector intervention.\u0000\u0000\u0000Findings\u0000In the context of a simple search and matching friction model with heterogeneous agents, the authors show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector. Employment targeting can, therefore, have perverse effects on labor market outcomes. The authors also find that it is possible that the private sector wage falls as a result of an increase in the public sector hiring rate, which leads to more job creation in the private sector.\u0000\u0000\u0000Originality/value\u0000What is less understood in the literature is the impact of employment targeting on the size of the informal sector in developing economies. The authors fill this gap and show that public sector intervention can have perverse effects on overall job creation and the size of the informal sector. Moreover, a decrease in the private sector wage due to a rise in public sector hiring reverses the consensus findings in the search and matching literature which show that an increase in public sector employment disincentivizes private sector vacancy postings.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/IGDR-06-2018-0065","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49088196","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/IGDR-04-2018-0039
Charu Grover, S. Bansal
Purpose This paper aims to investigate the role of certification in providing information and reducing market inefficiencies when the “certification process is imperfect”. In the setting, eco-labels imperfectly signal environmental product quality to consumers where the error in the process of certification could be either Type 1 or Type 2 error. The paper examines firms' incentive to get certified, equilibrium quantities and profits. The authors use perfect Bayesian equilibrium concept for the analysis. They then examine conditions for separating and pooling equilibrium to exist and welfare implications of certification process. Design/methodology/approach The paper uses a vertical product differentiated model where firms are competing in quantities. Consumers are unable to observe the environmental quality of the product. To signal the product quality to consumers, firms may adopt certification by a third party. Using a framework where certification process is imperfect, the paper derives conditions for Perfect Bayesian separating and pooling equilibrium to exist. Findings The paper shows that the existence of separating and pooling equilibrium depends on the certification fee. A separating equilibrium, where one firm seeks certification and other firm does not seek certification exists for an intermediate value of certification fee. A pooling equilibrium, where both firms seek certification, exists only when the certification fee is sufficiently small. The paper shows conditions for the certification fee for which welfare will be higher under separating equilibrium as compared to pooling equilibrium and analyses welfare implications for subsidy policy for the certification fee. Originality/value The paper contributes to the literature by examining the role of labelling under imperfect certification.
{"title":"Imperfect certification and eco-labelling of products","authors":"Charu Grover, S. Bansal","doi":"10.1108/IGDR-04-2018-0039","DOIUrl":"https://doi.org/10.1108/IGDR-04-2018-0039","url":null,"abstract":"\u0000Purpose\u0000This paper aims to investigate the role of certification in providing information and reducing market inefficiencies when the “certification process is imperfect”. In the setting, eco-labels imperfectly signal environmental product quality to consumers where the error in the process of certification could be either Type 1 or Type 2 error. The paper examines firms' incentive to get certified, equilibrium quantities and profits. The authors use perfect Bayesian equilibrium concept for the analysis. They then examine conditions for separating and pooling equilibrium to exist and welfare implications of certification process.\u0000\u0000\u0000Design/methodology/approach\u0000The paper uses a vertical product differentiated model where firms are competing in quantities. Consumers are unable to observe the environmental quality of the product. To signal the product quality to consumers, firms may adopt certification by a third party. Using a framework where certification process is imperfect, the paper derives conditions for Perfect Bayesian separating and pooling equilibrium to exist.\u0000\u0000\u0000Findings\u0000The paper shows that the existence of separating and pooling equilibrium depends on the certification fee. A separating equilibrium, where one firm seeks certification and other firm does not seek certification exists for an intermediate value of certification fee. A pooling equilibrium, where both firms seek certification, exists only when the certification fee is sufficiently small. The paper shows conditions for the certification fee for which welfare will be higher under separating equilibrium as compared to pooling equilibrium and analyses welfare implications for subsidy policy for the certification fee.\u0000\u0000\u0000Originality/value\u0000The paper contributes to the literature by examining the role of labelling under imperfect certification.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/IGDR-04-2018-0039","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46976673","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/IGDR-07-2018-0079
P. Pandey, S. Sehgal, W. Ahmad
Purpose Banks in the South Asian region are the fulcrum of economic growth and development as they provide means to development credit and working capital, trade and infrastructure finance and are seen as custodians of the trust in the financial system. This paper aims to study the nature of banking sector linkages for the region. Design/methodology/approach The dependence structure between deposits and lending rates individually for the banks of the South Asian countries are studied using time invariant and time varying family of copula functions. The degree of connectedness is further studied by Diebold and Yilmaz methodology. Findings Results indicate poor levels of banking integration in the region as the dependence parameter for both deposits and lending rates was around 0 for the sample countries, thereby confirming poor banking sector integration in the region. Practical implications Policymakers of the region are interested in the co-movements of the interest rates to understand the cross-sector risk management and any systemic risk pressures for the regional economies. Corporates in these countries are scouting out for competitive borrowing rates to lower their cost of capital. Social implications Rationale for examining the banking sector linkages is that the South Asian countries are at different stages of economic growth and development and this region in particular is the fastest growing region in the world and has largely increased its trade integration with the world albeit having lowest levels of intra-regional trade integration. Originality/value This is a first of a kind of studies to examine the banking sector linkages in South Asia.
{"title":"Dynamics of banking sector integration in South Asia: an empirical study","authors":"P. Pandey, S. Sehgal, W. Ahmad","doi":"10.1108/IGDR-07-2018-0079","DOIUrl":"https://doi.org/10.1108/IGDR-07-2018-0079","url":null,"abstract":"\u0000Purpose\u0000Banks in the South Asian region are the fulcrum of economic growth and development as they provide means to development credit and working capital, trade and infrastructure finance and are seen as custodians of the trust in the financial system. This paper aims to study the nature of banking sector linkages for the region.\u0000\u0000\u0000Design/methodology/approach\u0000The dependence structure between deposits and lending rates individually for the banks of the South Asian countries are studied using time invariant and time varying family of copula functions. The degree of connectedness is further studied by Diebold and Yilmaz methodology.\u0000\u0000\u0000Findings\u0000Results indicate poor levels of banking integration in the region as the dependence parameter for both deposits and lending rates was around 0 for the sample countries, thereby confirming poor banking sector integration in the region.\u0000\u0000\u0000Practical implications\u0000Policymakers of the region are interested in the co-movements of the interest rates to understand the cross-sector risk management and any systemic risk pressures for the regional economies. Corporates in these countries are scouting out for competitive borrowing rates to lower their cost of capital.\u0000\u0000\u0000Social implications\u0000Rationale for examining the banking sector linkages is that the South Asian countries are at different stages of economic growth and development and this region in particular is the fastest growing region in the world and has largely increased its trade integration with the world albeit having lowest levels of intra-regional trade integration.\u0000\u0000\u0000Originality/value\u0000This is a first of a kind of studies to examine the banking sector linkages in South Asia.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/IGDR-07-2018-0079","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43626003","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-11-11DOI: 10.1108/IGDR-10-2018-0103
S. Aggarwal, B. Goldar
Purpose This study aims to analyze the structure and trend in employment in the Indian economy between 1980-8081 and 2015-2016. Design/methodology/approach Use of India KLEMS data set. Estimate growth rate of employment and discuss employment prospects using “Point” employment elasticity. Findings Whilst India’s GDP growth rate has been quite impressive since the reforms of 1991, the rate of employment growth, especially in the recent period of 2003-2015, has been quite slow (1 per cent) with low employment elasticity (0.1). The pattern of employment growth has also been imbalanced with slow rate of employment growth in manufacturing and rapid growth rate in the construction sector. India now also has low labour force participation rate and a large share of informal employment in the economy. Research limitations/implications The limitation is the lack of reliable data on employment for the recent period. Practical implications With overall low employment elasticity, India would have to explore sectors where more employment opportunities could be created. Social implications India has to create not only more jobs but also “good” jobs. Originality/value The India KLEMS data provide a time series for employment, which has been used in this paper to find “Point” elasticity instead of arc elasticity of employment and is an improvement over existing employment elasticity estimates.
{"title":"Structure and growth of employment: evidence from India KLEMS data","authors":"S. Aggarwal, B. Goldar","doi":"10.1108/IGDR-10-2018-0103","DOIUrl":"https://doi.org/10.1108/IGDR-10-2018-0103","url":null,"abstract":"\u0000Purpose\u0000This study aims to analyze the structure and trend in employment in the Indian economy between 1980-8081 and 2015-2016.\u0000\u0000\u0000Design/methodology/approach\u0000Use of India KLEMS data set. Estimate growth rate of employment and discuss employment prospects using “Point” employment elasticity.\u0000\u0000\u0000Findings\u0000Whilst India’s GDP growth rate has been quite impressive since the reforms of 1991, the rate of employment growth, especially in the recent period of 2003-2015, has been quite slow (1 per cent) with low employment elasticity (0.1). The pattern of employment growth has also been imbalanced with slow rate of employment growth in manufacturing and rapid growth rate in the construction sector. India now also has low labour force participation rate and a large share of informal employment in the economy.\u0000\u0000\u0000Research limitations/implications\u0000The limitation is the lack of reliable data on employment for the recent period.\u0000\u0000\u0000Practical implications\u0000With overall low employment elasticity, India would have to explore sectors where more employment opportunities could be created.\u0000\u0000\u0000Social implications\u0000India has to create not only more jobs but also “good” jobs.\u0000\u0000\u0000Originality/value\u0000The India KLEMS data provide a time series for employment, which has been used in this paper to find “Point” elasticity instead of arc elasticity of employment and is an improvement over existing employment elasticity estimates.\u0000","PeriodicalId":42861,"journal":{"name":"Indian Growth and Development Review","volume":" ","pages":""},"PeriodicalIF":1.4,"publicationDate":"2019-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/IGDR-10-2018-0103","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43181461","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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