Indian Journal of Industrial Relations: Economics & Social Dev.

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Transport Equipment Industry of India in the Era of Globalization


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1 Avinashilingam Institute for Home Science & Higher Education for Women, Coimbatore 641043, India
     

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This paper concentrates on testing returns to scale, elasticity of substitution and efficiency wage hypothesis (according to which the co-efficient of wage rate is more than of capital intensity) in transport equipment industry. Augmented Dickey Fuller Test, Cobb-Douglas Production Function, Constant Elasticity of Substitution (CES) and Variable Elasticity of Substitution (VES) were applied for the period 1991/92-2008/09. The increasing returns to scale of the industry was proved with the significant co-efficient of labor input. There was neutral technical progress. Co-efficient of wage rate was statistically significant. Its numerical value was close to unity indicating unitary elasticity of substitution. The results of VES production function supported the hypothesis of efficiency-wage.
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  • Kmenta, J. (1967),”On Estimation of the CES Production Function”, International Economic Review, 8(2):180-189

  • Narayan, Lakshmi (2003), “Productivity and Wages in Indian Industries”, Discovery Publishing House, New Delhi.

  • Panda, Hrushikesh (2001), “Technology, Factor Substitution and Employment Generation at the Firm Level : A Case of Automobile Industry in India”, The Indian Journal of Labor Economics, 40 (2): 205-20.


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  • Transport Equipment Industry of India in the Era of Globalization

Abstract Views: 303  |  PDF Views: 0

Authors

M. Manonmani
Avinashilingam Institute for Home Science & Higher Education for Women, Coimbatore 641043, India

Abstract


This paper concentrates on testing returns to scale, elasticity of substitution and efficiency wage hypothesis (according to which the co-efficient of wage rate is more than of capital intensity) in transport equipment industry. Augmented Dickey Fuller Test, Cobb-Douglas Production Function, Constant Elasticity of Substitution (CES) and Variable Elasticity of Substitution (VES) were applied for the period 1991/92-2008/09. The increasing returns to scale of the industry was proved with the significant co-efficient of labor input. There was neutral technical progress. Co-efficient of wage rate was statistically significant. Its numerical value was close to unity indicating unitary elasticity of substitution. The results of VES production function supported the hypothesis of efficiency-wage.

References