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Can Labour Regulation Hinder Economic Performance? Evidence from India

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  • Timothy Besley
  • Robin Burgess

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.

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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers with number 33.

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Date of creation: Feb 2002
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Handle: RePEc:cep:stidep:33

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

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Keywords: Indian industrial relations; Industrial Disputes Act; manufacturing growth; pro-worker regulations; urban poverty; capital and labour.;

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