Estimating the Impact of Human Capital Underutilization on the Productivity and Economic Growth in India

Abstract

The study investigates the impact of human capital underutilization on India’s economic growth and labor productivity. For this purpose, we have employed the Autoregressive Distributed Lag (ARDL) model, which was applied using the annual time series data from 2005 to 2019. The ARDL estimation results revealed that human capital underutilization has a negative but statistically insignificant relationship with economic growth in the long run. We also found that a short-run decrease in time-related underemployment increased labor productivity. Therefore, we recommend that the policymakers consider human capital utilization measures from the perspective of both individuals and the economy, which should also be addressed in their policy framework. Furthermore, the empirical insights of the study could be helpful for future labor policy recommendations in India and emerging economies across the globe.