This study makes an attempt to assess the impact of trade liberalization on services sector employment. Based on the time series macro data, the elasticity of organised services sector employment with respect to value added and exports and imports have been estimated. After controlling for growth it is difficult to identify a positive and significant impact of international trade on employment in the organized service sector. We have also tried to work out the direct and indirect effects of exports and imports on employment after deciphering their effects included in overall growth. However, the positive effects are mostly negligible. For the informal or unorganized services sector employment the impact does not seem to be greatly different from what is observed in the case of the organized services sector employment. Also as per the company level data international trade does not seem to be an important determinant of employment in the services sector.
IMPACT OF TRADE ON SERVICE SECTOR EMPLOYMENT IN INDIA
Working Paper Series No. E/298/2009