Does Casualization Increase the Job Opportunity to the Workers or Impoverish Them? An Evidence from Indian-Organized Manufacturing Sector

Abstract

This article investigates the impact of casualization on the labour market of organized manufacturing industries in India. In specific, this article analyses the impact of casualization on the labour demand and output elasticity of 15 manufacturing industries in the post-liberalization period for the direct production workers. Dynamic panel data analysis of system generalized methods of moment method is used here for the estimation of lagged labour demand for permanent production workers. Aggregate level analysis ensures that casualization has a significant positive impact on the labour demand and on output elasticity. Disaggregate level analysis also confirms the significant positive impact on the output elasticity at individual industry level. However, wage share of the workers falls along with the increase in the usage of contract workers across most of the industries. Output elasticity increases but at the cost of falling wage share. Casualization generates more job opportunity but reduces the wage share for the permanent production workers in post-liberalization period.

JEL Codes: J20, J21, J30, J46, C23

Keywords

Labour demand output elasticity wage share contract workers dynamic panel data analysis

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