An Econometric Analysis of a Complementarity between profit-wage and capital-labour: Skill-Biased Technological Change in Indian Services Sector

Abstract

This paper econometrically tests a complementary between the profit-wage and capital-labour ratios in the Indian services sector for the period of 1999-2017. The higher surplus-value is examined in terms of higher labour productivity, lower employment and lower wages. Two specific policy implications are advocated to revamp the Indian services sector for its sustainable future: (i) there is a need to increase public investment in the Indian services sector to expand  employment opportunities and wages, to address the issues of deficiency of aggregate demand; (ii) there is also a need to reverse the complementary between profit-wage  and capital-labour ratio to a complementary between wage-profit and labour-capital ratios, as that can lead to stable and sustainable demand and supply in Indian economy.