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Labor Regulations and Plant Location Choice: Evidence From India

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Author Info

  • Paroma Sanyal

    (Brandeis University)

  • Nidhiya Menon

    (Brandeis University)

Abstract

Certain regulations in developing countries have often been cited as impediments to progress. This paper considers one facet of these regulations - labor laws - and investigates whether these have detrimental effects on firm location and investment decisions. Conventional wisdom holds that pro-worker labor regulations within a state would hinder firm location in that state. We fine strong evidence that this is indeed the case, and our results are robust to alternative specifications. Furthermore, disaggregation by industrial classifications shows that although labor regulations continue to exert negative effects, location choices are also conditioned on other factors such as proximity to raw materials and minerals.

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File URL: http://128.118.178.162/eps/io/papers/0403/0403007.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0403007.

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Length: 37 pages
Date of creation: 22 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwpio:0403007

Note: Type of Document - pdf; pages: 37. 37 pages, pdf document.
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Web page: http://128.118.178.162

Related research

Keywords: Labor regulations; location choice; India;

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  1. Timothy Besley & Robin Burgess, 2002. "Can labour regulation hinder economic performance? Evidence from India," LSE Research Online Documents on Economics 3779, London School of Economics and Political Science, LSE Library.
  2. Dean, Thomas J. & Brown, Robert L. & Stango, Victor, 2000. "Environmental Regulation as a Barrier to the Formation of Small Manufacturing Establishments: A Longitudinal Examination," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 56-75, July.
  3. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
  4. Arora, Seema & Cason, Timothy, 1996. "Do Community Characteristics Determine Environmental Outcomes? Evidence from the Toxics Release Inventory," Discussion Papers dp-97-12, Resources For the Future.
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