Analysis of Composition of Workers in Indian Manufacturing Industries

Abstract

The Hecksher Ohlin (H-O) theoretical arguments and their further implications drawn by the Stopler-Samuelson model argue that, based on factor cost advantages, the labour surplus developing economies would have comparative advantage in producing and exporting labour intensive products, while the capital abundant developed economies would have comparative advantage in producing and exporting capital intensive products. This in turn would generate demand for less skilled workers in the developing economy and that of more skilled workers in the developed economies. However, contrary to the H-O trade theoretic predictions of rising relative demand for sector specific unskilled or less skilled employment in developing economies, empirical evidence for India suggests a different picture across different industries in Indian manufacturing sector.