Global Value Chain Linkages and Employment: Empirical Assessment for India’s Manufacturing Sector

Abstract

We explore the connection between global value chain linkages and employment outcomes for 17 manufacturing sectors in India utilizing panel long run estimator and short run dynamics for the period 1995–2017. We model this relationship within the production function framework and disentangle two significant outcomes. In the first place, we find that in four varieties of the advancement model, employment and value chain linkages exhibit a long run relationship; that is, they are cointegrated. Second, we find that over the long haul, while forward linkages (DVX), compensation to labourers and industrial economic growth have contributed decidedly to employment in manufacturing sector, while the backward linkages (FVA) have had an unimportant impact. Another striking result in the short run shows that in an emerging economy like India, a rise in forward value chain linkage is directly associated with an increase in relative employment of skilled labour force. We draw significant arrangement suggestions from these findings.