Can Labor Regulation Hinder Economic Performance? Evidence from India

Economics

Speaker:Tim Besley, London School of Economics
Date: Friday 1 November 2002
Time: 16:15
Location: Room 106 Streatam Court

Further details

(with Robin Burgess)

This paper investigates whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth in the period 1958-92. We show that pro-worker ammendments to the Industrial Disputes Act are associated with lowered investment, employment, productivity and output in registered manufacturing. Regulating in a pro-worker direction is also associated with increases in urban poverty. This suggests that attempts to redress the balance of power between capital and labor can end up hurting the poor.