Impact of Elasticities of Substitution, Technical Change, and Labour Regulations on Labour Welfare in Indian Industries
AbstractThis paper primarily investigates the issue of labour welfare in Indian industries, and seeks to make a contribution to the debate on labour reforms currently underway in India. It investigates the relative importance of technical change, elasticities of substitution, and labour regulations for labour welfare, proxied by the income shares of skilled and unskilled labour in total costs. Three primary conclusions arise. First, pure technical change has no discernible impact on income shares. Second, there is a clear pattern between the magnitudes of and changes in elasticities of substitution and associated incomes shares. Elasticity changes have tended to favour skilled labour and hurt unskilled labour. Finally, pro-worker labour regulations have a somewhat positive impact on unskilled labour shares, by mitigating the negative impact of substitution elasticities, but not completely reversing them. Pro-employer regulations, by contrast, do not have a good record of safeguarding labour interests. Based on these conclusions, the paper makes the case that a clear articulation of the goals for labour reforms should precede their designing.
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Bibliographic InfoPaper provided by The Australian National University, Australia South Asia Research Centre in its series ASARC Working Papers with number 2012-10.
Date of creation: 2012
Date of revision:
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More information through EDIRC
Labour force & employment; labour policy; manufacturing; production structure; technological change;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-14 (All new papers)
- NEP-LAB-2012-07-14 (Labour Economics)
- NEP-LMA-2012-07-14 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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