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Labour law, enforcement and the rise of temporary contract workers: empirical evidence from India’s organised manufacturing sector

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  • Rahul Suresh Sapkal

    () (Universität Hamburg)

Abstract

Abstract There is an intense debate on the impact of labour regulation in India today. Labour regulation in India differ state-wise and apply differently across types of workers (both regular and contract workers). This paper examines the joint effects of Employment Protection Legislation (EPL) and variable enforcement intensity on the growth in a size of temporary contract workers in the organised manufacturing sector. It uses the state level amendments to Industrial Dispute Act of 1947, and the average size of total number of labour inspectors for each state, as independent variables to capture the variation in labour regulations and enforcement intensity across thirty-one Indian states for the period 2000–2007. This paper argues that, average Indian firms located in strict EPL states hire differentially more temporary contract workers as compare to regular workers in response to variable enforcement intensity. Among other findings, the empirical analysis shows that firms prefer to employ excessive number of contract workers to circumvent firing and overall compliance costs of regular workers as stipulated by the Indian labour laws. Our results are robust to alternative specifications.

Suggested Citation

  • Rahul Suresh Sapkal, 2016. "Labour law, enforcement and the rise of temporary contract workers: empirical evidence from India’s organised manufacturing sector," European Journal of Law and Economics, Springer, vol. 42(1), pages 157-182, August.
  • Handle: RePEc:kap:ejlwec:v:42:y:2016:i:1:d:10.1007_s10657-015-9514-z
    DOI: 10.1007/s10657-015-9514-z
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    Cited by:

    1. Jaivir Singh & Deb Kusum Das & Homagni Choudhury & Prateek Kukreja, 2016. "Law, Skills and the Creation of Jobs as ‘Contract’ Work in India: Exploring Survey Data to make Inferences for Labour Law Reform," Working Papers id:11380, eSocialSciences.
    2. repec:spr:ijlaec:v:60:y:2017:i:2:d:10.1007_s41027-017-0097-9 is not listed on IDEAS
    3. Sofi Irfan Ahmad & Khachoo Abdul Qayoom & Khan Mohd Imran & Kunroo Mohd Hussain, 2016. "Labour Market Regulations and In-formalisation of Migrant Worker: Evidence from Indian Manufacturing Sector," Asian Journal of Law and Economics, De Gruyter, vol. 7(2), pages 169-195, August.
    4. Landau, Ingrid. & Mahy, Petra. & Mitchell, Richard., 2015. "The regulation of non-standard forms of employment in India, Indonesia and Viet Nam," ILO Working Papers 994888153402676, International Labour Organization.
    5. Sofi Irfan Ahmad & Sharma Pritee, 2015. "Labour Laws and Informalisation of Employment: Panel Evidences from Indian Formal Manufacturing Sector," Asian Journal of Law and Economics, De Gruyter, vol. 6(1), pages 65-84, April.

    More about this item

    Keywords

    India; Contract workers; Labour regulation; Enforcement;

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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