Does schooling affect labour productivity and earnings? evidence from the unorganised coir yarn manufacturing sector in Kerala, India

This article explores the role of human capital in determining labour productivity and earnings in the unorganised manufacturing sector by focusing on the coir yarn manufacturing units in the Indian state of Kerala. The study is based on primary survey data collected from 188 co-operative, private and household enterprises. By using an augmented Cobb-Douglas production function, the impact of education and firm level characteristics on labour productivity has been examined. The influence of education and experience on labour earnings has also been analysed by estimating an earnings function from the reported wages of workers in household enterprises. The study has established that there is a positive relationship between education, labour productivity and earnings and the sector would stand to benefit from a more educated labour force.