DP3260 Can Labour Regulation Hinder Economic Performance? Evidence from India
|Author(s):||Timothy J. Besley, Robin Burgess|
|Publication Date:||March 2002|
|Keyword(s):||industrial relations, labour regulation|
|JEL(s):||H00, H10, I30, J50, K20, L50, L60, O20, O40|
|Programme Areas:||Public Economics|
|Link to this Page:||http://www.cepr.org/pubs/dps/DP3260|
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 amendments 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 labour can end up hurting the poor.