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Can Labour Regulation Hinder Economic Performance? Evidence from India

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  • Besley, Timothy J.
  • Burgess, Robin

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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3260.

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Date of creation: Mar 2002
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Handle: RePEc:cpr:ceprdp:3260

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Keywords: industrial relations; labour regulation;

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