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Estimating workers bargaining power and firms markup in India: Implications of reforms and labour regulations

Rupayan Pal and Udayan Rathore (udayan@igidr.ac.in)
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Udayan Rathore: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: We examine implications of industrial deregulations, trade liberalisation and labour regulations on workers' bargaining power and firms' markup in Indian manufacturing industries, using state-wise three-digit industry-level panel data for the period 1980-2007. Results of our econometric analysis suggest that both industrial deregulations and trade liberalisation led to significant declines in workers bargaining power, which was already less than 6.7 on an average during pre-reform era. However, none of these reforms appears to have any significant effect on firms' markup. Our results also suggest that amendments to labour regulation by State governments, which aim to simplify procedures and reduce costs of industrial dispute resolutions, have a significant positive effect on workers' bargaining power. Surprisingly, amendments to Employment Protection Legislations do not appear to have any significant effect on workers' bargaining power. We also document considerable variation in firms' markup and workers' bargaining power across industry-groups and States.

Keywords: Workers bargaining power; firms markup; industrial deregulations; trade liberalisation; labour regulations; India (search for similar items in EconPapers)
JEL-codes: F16 J50 L13 L60 O14 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-09
New Economics Papers: this item is included in nep-hme and nep-lab
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Citations: View citations in EconPapers (1)

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Journal Article: Estimating workers’ bargaining power and firms’ markup in India: Implications of reforms and labour regulations (2016) Downloads
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