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September 18, 2025Asian Economic Papers

Why is Labor Receiving a Declining Share of Income in India? Role of Trade and Market Share Reallocation

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Authors

CVC. VeeramaniABAnwesha Basu

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Overview

Empirical analysis reveals the role of trade and market share in declining labor share in India.

Key Points

  • Labor share in India is declining, closely tied to market share reallocation and structural changes in the economy.
  • The study finds that trade openness is associated with labor share, but only partially mitigates domestic structural effects.
  • Atypical structural transformation bypassed labor-intensive growth, leading to a focus on capital- and skill-intensive sectors.
  • Firm-level evidence indicates that tariff liberalization and global value chain participation shape labor share dynamics.

Cite This Study

Veeramani et al. (2025) studied this question.

synapsesocial.com/papers/68d461c231b076d99fa60cfehttps://doi.org/10.1162/asep.a.1
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