Economic reforms have been pursued in India since 1991 with the aim of achieving higher economic growth leading to an increase in employment. While the average Gross Domestic Product growth rate rose to just above 6% during the post-reform period 1991-2002, the overall employment situation in the organized sector deteriorated. Employment in organized manufacturing, however, witnessed a positive growth till 1997-98. Further, the results of the labour demand function in organized manufacturing shows that economic reforms have a positive impact on demand for labour. As expected, real wages and productivity are found to have a negative impact on labour demand. On the other hand, gross rate of return, gross capital formation and net value added have a positive sign for labour demand in organized manufacturing.
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