Does the Presence of Surplus Labor Hinder Production in Indian Manufacturing?
AbstractInput congestion occurs at a given input bundle when the assumption of free disposability of inputs does not hold and an increase in input leads to a decline in output. In this paper we employ the nonparametric method of Data Envelopment Analysis (DEA) to examine the question on input congestion with respect to labor, using state level data from the Annual Survey of Industries for the period 1986-87 through 1999-2000. When the standard assumption of strong disposability is relaxed for the labor inputs, the nonparametric analysis of state-level data from Indian manufacturing shows considerable measure of labor input congestion. While in selected states congestion comes from non-production workers as well, the principal source of labor congestion is production labor. There is no evidence that the problem of labor congestion has become less severe during the post-Reform years. It appears that market forces without any major institutional changes in enforcement of labor discipline cannot eliminate congestion.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2003-48.
Length: 35 pages
Date of creation: Dec 2003
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- Subhash Ray & Anasua Bhattacharya, 2003. "Surplus Labor in Indian Manufacturing: Evidence from the Annual Survey of Industries," Working papers 2003-14, University of Connecticut, Department of Economics.
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