The evolution of India’s industrial labour share and its correlates

Jayadev, Arjun and Narayan, Amay (2018) The evolution of India’s industrial labour share and its correlates. Working Paper. Azim Premji University, Bengaluru.

Text - Published Version
Download (954kB) | Preview


There has been substantial recent interest in the decline of labour shares across countries. For the most part, attention has been focused on developed countries. We examine the evolution of India’s labour share in its formal industrial sector from 1983- 2014. Using two datasets corresponding to sectoral aggregate data and plant-level data respectively, we document a secular decline in the labour share across all sectors from 1983, with a stabilisation at very low levels (around 8 to 10 percent) starting around 2005. We then use the plant-level data to identify the reasons for the overall decline in the labour share. We find strong evidence to support multiple causes: increased capital intensity, greater informalisation, greater privatisation, and productivity increases in larger firms. As such, we suggest that the declines in labour share experienced are due to a composite set of factors. Conversely, other potential explanations (for example, regional variation in the labour share) have less explanatory power.

Item Type: Monograph (Working Paper)
Authors: Jayadev, Arjun and Narayan, Amay
Uncontrolled Keywords: Industrial Labour, industrial labour share, National income, Wages, wage share, labour capital
Subjects: Social sciences > Economics > Labor economics
Divisions: Azim Premji University > Research Centre > Centre for Sustainable Employment
Full Text Status: Public
Related URLs:
Publisher URL:

Actions (login required)

View Item View Item