Are All Labor Regulations Equal? Assessing the Effects of Job Security, Labor Dispute, and Contract Labor Laws in India

50 Pages Posted: 20 Apr 2016

See all articles by Ahmad Ahsan

Ahmad Ahsan

World Bank

Carmen Pages

Inter-American Development Bank (IADB); IZA Institute of Labor Economics

Date Written: June 1, 2007

Abstract

This paper studies the economic effects of legal amendments on different types of labor laws. It examines the effects of amendments to labor dispute laws and amendments to job security legislation. It also identifies the effects oflegal amendments related to the most contentious regulation of all-Chapter Vb of the Industrial Disputes Act - which stipulates that firms with 100 or more employees cannot retrench workers without government authorization. The analysis finds that laws that increase job security or increase the cost of labor disputes substantially reduce registered sector employment and output but do not increase the labor share. Labor-intensive industries, such as textiles, are the hardest hit by laws that increase job security while capital-intensive industries are most affected by higher labor dispute resolution costs. The paper concludes that widespread and increasing use of contract labor may have brought some output and employment gains but did not make up for the adverse effects of job security and dispute resolution laws.

Keywords: Labor Markets, Labor Standards, Labor Management and Relations, Public Sector Regulation, Legal Products

Suggested Citation

Ahsan, Ahmad and Pages-Serra, Carmen, Are All Labor Regulations Equal? Assessing the Effects of Job Security, Labor Dispute, and Contract Labor Laws in India (June 1, 2007). World Bank Policy Research Working Paper No. 4259, Available at SSRN: https://ssrn.com/abstract=995080

Ahmad Ahsan

World Bank ( email )

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Carmen Pages-Serra (Contact Author)

Inter-American Development Bank (IADB) ( email )

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IZA Institute of Labor Economics

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