Unraveling Labour Productivity Growth and Economic Growth Nexus in India: A Toda-Yamamoto Dynamic Granger Causality Approach
Issue:
Volume 8, Issue 4, December 2022
Pages:
62-71
Received:
8 October 2022
Accepted:
7 November 2022
Published:
23 November 2022
DOI:
10.11648/j.ajtab.20220804.11
Downloads:
Views:
Abstract: In a thickly populated country like India where there are abundant skilled and unkilled labour forces, economic growth along the path of GDP growth can be augmented when the number of workers increases in production process providing opportunity for employment or when each worker produces more. Competitiveness, standard of living and also economic growth of a country are connected with labour productivity growth. That is why, labour productivity growth is construed as one of the essential instruments of economic growth in general and industrial progress in particular. In view of this, the article explores the direction of causal link between labour productivity growth and economic growth via GDP growth in India. By adopting the techniques of unit–root tests (ADF, PP and KPSS), and Toda and Yamamoto long–run dynamic Granger causality test, the causal connection between the above two variables has been investigated using annual data for the period 1990 to 2018. The findings suggests that there exist bidirectional causality between labor productivity and economic growth indicating that labour productivity is a vital cause of economic growth and economic growth via GDP growth enhances labour productivity in India. The study concludes with a note of optimism that the policy makers in India should be cautious enough in implementing its economic policies towards healthy sustainable economic development and strengthening labour productivity as well as employment generation.
Abstract: In a thickly populated country like India where there are abundant skilled and unkilled labour forces, economic growth along the path of GDP growth can be augmented when the number of workers increases in production process providing opportunity for employment or when each worker produces more. Competitiveness, standard of living and also economic ...
Show More
