MACROECONOMIC GROWTH AND LABOUR MARKET DYNAMICS: AN EMPIRICAL ANALYSIS OF GDP, LABOUR FORCE PARTICIPATION, AND UNEMPLOYMENT

Abstract

This paper was an attempt to explore the complex connection between the growth of the Indian economy, labour force, and unemployment with the aim of understanding how the growth of the GDP would be reflected in the employment outcomes in the face of structural change. The study employed quantitative methods of analysis by using correlation and regression of longitudinal economic and labour market data over several decades. The major results indicated the existence of a significant positive relationship between GDP growth and labour force participation, and a strong negative relationship between the GDP growth and the changes in the unemployment rate. Such results imply that economic growth must be augmented by specific policies on skills development, industrial modernization with employment orientation, and social constraints to the inclusive labour market participation. The implications underline the need to have holistic and gender sensitive policy frameworks that would guarantee sustainable and equalized growth in employment. The study has an added value to the literature because it clarifies the inductive nature of the relationship between economic growth and labour market performance in India and offers future research and policymaking a direction to maximise the demographic dividend and lead to an inclusive approach to developing India.