Author: Purna Banerjee and C. Veeramani
Title: Export Competitiveness, Labour Laws, and Gender Differences in Job Dynamics: Analysis of Manufacturing Industries across Indian States
Abstract: Increased participation of women in productive employment is a prerequisite for achieving gender equality and other sustainable development goals. Yet, female labour force participation in India, a country home to about 17% of the world’s women, is abysmally low. Against this background, using plant level data, we obtain gender-wise estimates of job dynamics – job creation, destruction and reallocation – across 32 Indian states and Union Territories and 58 formal manufacturing industries for 1998-99 to 2014-15. This paper departs from earlier studies by focusing on measures of job dynamics, as opposed to static net employment measures, and on the demand side determinants of employment outcomes. We analyse whether industry-level changes in export competitiveness, mediated through exchange rate fluctuations, explain the variation in job dynamics for each gender group. We also examine whether this relationship is conditional on state level variation in labour market conditions. Our estimates suggest that, even as net job creation rate is quite low, the labour market has experienced significant labour turnover for both gender groups, particularly in states with relatively flexible labour laws. Dynamic panel data regression analysis provides evidence for an asymmetric impact of exchange rate in that while depreciation (appreciation) is found to increase (reduce) gross job creation rates, exchange rate changes do not exert any effect on gross job destruction rates. Improvement in export competitiveness positively influences gross and net job creation in states with flexible labour market but not in states with rigid labour markets. The results indicate that when faced with labour market rigidities female workers face greater job reallocation compared to male workers. Our results remain unchanged even if we control for the use of contractual workers that provide some de facto labour market flexibility to producers.
Keywords: Gross job flows, real exchange rate, competitiveness, gender
JEL Code: F16, F41, J16