Consider the following statements regarding Employment Elasticity of Growth:
1. It is the percentage change in employment of labour force in response to percentage change in population growth.
2. Additional labour force can be suitably employed only when employment elasticity of growth is high.
3. In India, employment elasticity has shown a declining trend in the past decade.
Which of the statements given above is/are correct?
1 and 2 only
Incorrect Answer2 and 3 only
Correct Answer1, 2 and 3
Incorrect AnswerExplanation:
Statement 1 is incorrect. Employment elasticity of growth is percentage change in employment of labour force in response to percentage change in economic growth i.e. ratio of growth rate of employment to growth rate of GDP.
Statement 2 is correct. The importance of the concept of employment elasticity of growth lies in the fact that it determines the employment capabilities of an economy. Additional labour force can be suitably employed only when employment elasticity of growth is high. If the employment elasticity of growth is less, then some of the labour force remains employed.
Statement 3 is correct. The employment elasticity in India in the last decade declined from 0.44 in the first half of the decade 1999-2000 to 2004-05, to as low as 0.01 during second half of the decade 2004-05 to 2009-10. The similar trends have been witnessed at the sectoral level, namely agriculture, service, and manufacturing sectors. In agriculture and manufacturing employment elasticity in the latter half of the decade has been negative.
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By: Abhipedia