Growth, Employment and Structural Change: Punjab Versus 16 Major States of India

This paper studies the decomposition of GSDP growth per capita in Punjab via-a-vis 15 other states in India during 1993–94 and 2011–12 in terms of employment and productivity growth. Specifically, it focuses on the role of employment growth and structural change in employment on economic growth. It reviews the theoretical rationale, presents the growth patterns in GSDP and employment, and estimates the employment-productivity components of GSDP growth per capita using the Shapley decomposition analysis. The results show that Punjab has slipped in terms of GSDP per capita over this period but structural shifts have paid off well in terms of diversification of the economy and their contribution to labour productivity especially for manufacturing. Overall employment effect had been negative but this was essentially due to contraction in the labour force; the employment rate effect turned out to be positive. Finally, while the state was outpaced by other states in terms of growth rate in GSDP per capita and even employment, structural change in the economy has been a positive feature of growth in the state.