Labour Market Flexibility and Changes in Employment: Spatial and Temporal Evidence from Indian Manufacturing

Gopal Roy, Amaresh Dubey () and Suresh Ramaiah ()
Additional contact information
Amaresh Dubey: Jawaharlal Nehru University
Suresh Ramaiah: Jawaharlal Nehru University

The Indian Journal of Labour Economics, 2020, vol. 63, issue 1, No 5, 98 pages

Abstract: Abstract This paper delves into the debates concerning labour market flexibility in India and suggests an improved measure of labour market flexibility to overcome the shortcomings of the existing measures. A state-wise time-variant composite index considering both de jure and de facto indicators of flexibility is constructed to account for the stringency of regulation of hiring and firing practices that affect labour adjustment mechanism of organised manufacturing sector firms in India. The newly built index reaffirms the criticism and limitations of the existing measures which solely rely on de jure indicators by pointing out that de jure measures alone are highly misleading and insufficient to identify a state’s labour market flexibility status. The index has been put to application in examining the role of spatial variation in labour market flexibility in explaining the difference in employment growth in India’s organised manufacturing sector. The paper finds no evidence in support of a statistically significant effect of spatial variation in flexibility in explaining the variation in employment growth. Interestingly, the paper demonstrates that employment elasticity of growth was lower in “flexible” states as compared to the “rigid” states, indicating that greater flexibility is associated with a weaker employment performance.

Keywords: Labour market flexibility; Labour market indicators; Labour law; Labour policy; Employment; India (search for similar items in EconPapers)
JEL-codes: J08 J20 J63 J88 K31 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s41027-020-00207-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ijlaec:v:63:y:2020:i:1:d:10.1007_s41027-020-00207-8

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/41027

DOI: 10.1007/s41027-020-00207-8

Access Statistics for this article

The Indian Journal of Labour Economics is currently edited by Alakh Sharma

More articles in The Indian Journal of Labour Economics from Springer, The Indian Society of Labour Economics (ISLE) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().