Impact of liberalization on employment in India

R. K. Shastri¹*, Ravindra Tripathi¹ and Anushree Singh²

¹Department of Humanities and Social Sciences, Motilal Nehru National Institute of Technology, Allahabad, India.

²Motilal Nehru National Institute of Technology, Allahabad, India.

*Corresponding author. E-mail: rajeshkumarshastri@gmail.com.

Accepted 19 April, 2010

 Abstract

Trade liberalization refers to the removal of government incentives and restrictions from trade between nations. Rapidly increasing flows of goods and services across national borders have been the most visible aspect of the increasing integration of the global economy in recent decades. There is a vast body of literature which shows that trade is good for economic growth which in turn is also good for poverty reduction. The economic theory suggests that trade liberalization may raise labour productivity in the developing economies but it also has differential impact on their wages and employment. Higher trade has mostly been associated with higher employment but lower wages. In this context the impact of trade liberalization on employment is of particular significance. The present study has examined the changes in the employment scenario of India following the pursuance of the trade liberalization strategy and the possible effects of further trade liberalization.

Key words: Liberalization, globalization, wages, economy, employment, unemployment, recession.