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Are all labor regulations equal ? Assessing the effects of job security, labor dispute, and contract labor laws in India

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Author Info

  • Ahsan, Ahmad
  • Pages, Carmen

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 of legal 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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4259.

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Date of creation: 01 Jun 2007
Date of revision:
Handle: RePEc:wbk:wbrwps:4259

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Related research

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

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Cited by:
  1. John Bennett, 2010. "Informal firms in developing countries: entrepreneurial stepping stone or consolation prize?," Small Business Economics, Springer, vol. 34(1), pages 53-63, January.
  2. Damien Krichewsky, 2010. "Negotiating the Terms of A New Social Contract: Private Companies, Civil Society and the State in India," Working Papers id:2394, eSocialSciences.
  3. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty from India," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 1-41, October.
  4. Carmen Pagés & Claudio E. Montenegro, 2007. "Job security and the age-composition of employment: evidence from Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 109-139, December.
  5. Aterido, Reyes & Hallward-Driemeier, Mary & Pagés, Carmen, 2007. "Investment Climate and Employment Growth: The Impact of Access to Finance, Corruption and Regulations Across Firms," IZA Discussion Papers 3138, Institute for the Study of Labor (IZA).
  6. Carmen Pagés-Serra & Reyes Aterido & Mary Hallward-Driemeier, 2007. "Clima de negocios y creación de empleo: El efecto del acceso al crédito, la corrupción y el marco regulatorio en el crecimiento de las empresas," Research Department Publications 4560, Inter-American Development Bank, Research Department.
  7. Gupta, Abhay, 2009. "Pre-reform Conditions, Intermediate Inputs and Distortions: Solving the Indian Growth Puzzle," MPRA Paper 14481, University Library of Munich, Germany.
  8. Gupta, Poonam & Hasan, Rana & Kumar, Utsav, 2009. "Big Reforms but Small Payoffs: Explaining the Weak Record of Growth and Employment in Indian Manufacturing," MPRA Paper 13496, University Library of Munich, Germany.
  9. Fox, Louise & Oviedo, Ana Maria, 2008. "Institutions and labor market outcomes in Sub-Saharan Africa," Policy Research Working Paper Series 4721, The World Bank.
  10. Amin, Mohammad, 2008. "Labor regulation and employment in India's retail stores," Social Protection Discussion Papers 44492, The World Bank.
  11. World Bank, 2010. "Turkey - Country Economic Memorandum Informality : Causes, Consequences, Policies," World Bank Other Operational Studies 2843, The World Bank.
  12. Abidoye, Babatunde & Orazem, Peter F. & Vodopivec, Milan, 2009. "Firing cost and firm size : a study of Sri Lanka's severance pay system," Social Protection Discussion Papers 50671, The World Bank.
  13. John Bennett, 2008. "Formality, Informality, and Social Welfare," CEDI Discussion Paper Series 08-06, Centre for Economic Development and Institutions(CEDI), Brunel University.
  14. Petia Topalova, 2008. "India," IMF Working Papers 08/54, International Monetary Fund.

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