| Summary/Abstract |
Indian manufacturing industries have experienced the major effects of economic reforms. Since the effect of any policy is ultimately transferred to workers, this article is an attempt to determine the extent to which labour productivity and wages are inter-related in manufacturing industries. The study uses state-level panel data of manufacturing industries and empirically tests the relevance of marginal productivity theory of wages and efficiency wage theory. After confirming the stationarity of the series, various empirical tests such as cointegration, vector error correction mechanism and Granger causality are applied to check the long-run equilibrium relationship between wage growth and productivity growth.
|