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Estimating workers’ bargaining power and firms’ markup in India: Implications of reforms and labour regulations

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  • Pal, Rupayan
  • Rathore, Udayan

Abstract

This paper simultaneously estimates workers’ bargaining power (WBP) and firm’s markup (FMU) in Indian manufacturing industries, using state-wise three-digit industry-level panel data for the period 1980–2007. It also examines the association of WBP and FMU with industrial deregulation, trade liberalisation and labour regulations. Results of the econometric analysis suggest that WBP is negatively associated with both industrial deregulations and trade liberalisation, but there is no significant association of FMU with these reforms. Further, pro-worker amendments to selected provisions of Industrial Disputes Act 1947, but not all, seem to enhance WBP to some extent. In light of these findings, policy implications are brought out.

Suggested Citation

  • Pal, Rupayan & Rathore, Udayan, 2016. "Estimating workers’ bargaining power and firms’ markup in India: Implications of reforms and labour regulations," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1118-1135.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:6:p:1118-1135
    DOI: 10.1016/j.jpolmod.2016.09.002
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    Cited by:

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    2. Kopel, Michael & Petrakis, Emmanuel & Ressi, Anna, 2019. "Endogenous scope of firm-union bargaining with vertical pay comparisons," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 39-52.
    3. Ashish Kumar Sedai, 2019. "Wages in Imperfect Markets: A Post-reforms Study of Indian Manufacturing," Journal of South Asian Development, , vol. 14(3), pages 257-280, December.
    4. Weilin Liu, 2022. "Did Trade Liberalization Boost Total Factor Productivity Growth in Manufacturing in India in the 1990s?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 43, pages 110-139, Fall.
    5. Nandi, Aurodeep, 2019. "Fiscal deficit targeting alongside flexible inflation targeting: India’s fiscal policy transmission," Journal of Asian Economics, Elsevier, vol. 63(C), pages 1-18.
    6. Stankov, Petar & Vasilev, Aleksandar, 2019. "Business reform outcomes: Why so different?," Journal of Policy Modeling, Elsevier, vol. 41(6), pages 1109-1127.
    7. Diti Goswami & Sourabh Bikas Paul, 2020. "Labor Reforms in Rajasthan: A boon or a bane?," Papers 2012.01016, arXiv.org.

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    More about this item

    Keywords

    Workers’ bargaining power; Firms’ mark-up; Industrial deregulations; Trade liberalisation; Labour regulations;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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