Institute for Social and Economic Change

Working Paper: 349

Employment-Export Elasticities for the
Indian Textile Industry

Tarun Arora



Potential for employment generation of Indian textile industry, as a result of increase in exports, is assessed at 3-digit level of National industrial classification 2008 using employment-export elasticities for the period 1988-2013. The employment and exports data are matched using the central product classification (Version 2) in order to get the concorded time series data for the period 1988-2013 and obtain sub-sector level elasticity estimates. Fully modified OLS (FMOLS) is used to estimate the long run employment-export elasticities. The elasticities are further used to forecast the employment till the year 2020 using time series ARIMA modeling technique. The results suggest remarkably high employment generation potential for sub-sector 139 (manufacture of other textiles) in comparison to sub sector 131(spinning, weaving and finishing of textiles). The analysis is useful in designing sub-sector specific employment generation policies for industrial sector.

Working Papers