Quality Employment and Firm Performance Evidence from Indian Firm-Level Data

Abstract

We investigate the characteristics of manufacturing firms in India that generate better quality employment and the relationship between quality employment and firm performance using multiple measures of employment quality. Larger firms tend to generally provide better quality employment opportunities even after controlling for aspects related to employee skills. The organizational structure of firms matters, with government, private, and cooperative firms generally in terms of providing higher quality employment and better compensation measures, but lower quality employment in terms of gender equality. Overall, employment compensation does lead to higher profit, labor productivity, and capital productivity. However, providing more direct employment appears to constrain profits and productivity while increases in gender equality tend to have a negative effect on labor productivity.

Keywords: quality employment, labor productivity, firm performance, manufacturing, industrial policy, gender equality, employee skills, government, private and cooperative firms, economics working paper no. 277

JEL Classification: J08, L25