Are All Labor Regulations Equal? Evidence from Indian Manufacturing

Ahmad Ahsan () and Carmen Pages
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Ahmad Ahsan: World Bank

No 3394, IZA Discussion Papers from IZA Network @ LISER

Abstract: Using manufacturing data for India, this paper studies the economic effects of legal amendments on two types of labor laws: employment protection and labor dispute resolution legislation. We find that laws that increase employment protection or the cost of labor disputes substantially reduce registered sector employment and output. These laws do no seem to benefit workers either, as they do not increase the share of value added that goes to labor. Labor-intensive industries, such as textiles, are the hardest hit by amendments that increase employment protection while capital-intensive industries are the most affected by laws that increase the cost of labor dispute resolution. These adverse effects are not alleviated by the widespread and increasing use of contract labor, particularly in regards to employment. Results are robust to an alternative codification of legal amendments suggested by Bhattacharjea (2006).

Keywords: employment protection; labor dispute resolution; contract labor; employment; India (search for similar items in EconPapers)
JEL-codes: J23 J52 K31 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2008-03
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-lab, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Journal Article: Are all labor regulations equal? Evidence from Indian manufacturing (2009)
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