Analysis of Causality between Wage and Productivity in Food and Beverage Industry in India

Abstract

The present chapter examined the behavior of relative wage rate, productivity of labor, and total factor productivity growth (TFPG) and also attempted to explore the causal relationship between relative wage rate and productivity of labor as well as relative wage rate and TFPG in food and beverage industry in India over the period 1980–1981 to 2017–2018. The result of Sen (2003) approach of endogenous structural break suggests that the series of relative wage rate, productivity of labor, and TFPG follows trend stationary process. A significant break is found for all the three aforementioned variables, being 1984–1985 for relative wage rate and productivity of labor whereas 2007–2008 for TFPG. For the three variables, growth rate has increased after the break. Bidirectional causality between relative wage rate and productivity of labor as well as relative wage rate and TFPG is evident.

Citation

Pal, S., Chakraborty, C. and Pal, D. (2021), "Analysis of Causality between Wage and Productivity in Food and Beverage Industry in India", Pal, M.K. (Ed.) Productivity Growth in the Manufacturing Sector, Emerald Publishing Limited, Leeds, pp. 231-240. https://doi.org/10.1108/978-1-80071-094-820211017