Economic Growth, Employment and Rising Education Qualifications of Workforce in Indian Economy

The paper uses econometric models for analysing rising education qualifications of the manpower in the process of growth of GNP in India from 1972–73 to 2011–12. Period is classified into two parts: 1972–73 to 2003–04 and 2000–01 to 2011–12 for analytical purpose. Findings reveal that GNP grew 2.82 times more rapidly than total employment and employment of below graduates in first period, but GNP increased 8.03 and 4.85 times more rapidly than total employment and employment of graduates during the second period. GNP increased 19.4 times more rapidly than employment of below graduates, which declined during the second period. Employment of graduates and above rose 1.83 and 5.16 times more rapidly than GNP and employment of below graduates in first period. But, employment of graduates per below graduate increased in both the periods. Employment of below graduates declined in second period, suggesting replacement of less by more qualified personnel. Time series of GNP is found non-stationary, while time series of all three categories of employment emerges stationary on the Dickey-Fuller unit root test. Distributed lag specification of Solow's modified production function, with graduates per below graduates as determinant of output, yields satisfactory results. The function is also valid on Engel-Granger unit root test of residuals/co-integration. Results of the study lend support to the theses that (i) growth of employment has lagged behind the growth of economy and (ii) more qualified persons have been displacing the less qualified manpower in employment.