Can Labour Regulation Hinder Economic Performance? Evidence from India

Besley, Timothy J.; Burgess, Robin

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Can Labour Regulation Hinder Economic Performance? Evidence from India

LSE STICERD Research Paper No. DEDPS33

52 Pages Posted: 30 Apr 2008

See all articles by Timothy J. Besley

Timothy J. Besley

London School of Economics & Political Science (LSE) - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Robin Burgess

London School of Economics (LSE) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

There are 2 versions of this paper

Date Written: February 2002

Abstract

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.

Suggested Citation: Suggested Citation

Besley, Timothy J. and Burgess, Robin, Can Labour Regulation Hinder Economic Performance? Evidence from India (February 2002). LSE STICERD Research Paper No. DEDPS33, Available at SSRN: https://ssrn.com/abstract=1127002