IDEAS home Printed from https://ideas.repec.org/a/sae/agspub/v7y2018i1p51-77.html
   My bibliography  Save this article

Do Labour Laws and Rising Real Wages Explain Employment Stagnation in the Organized Manufacturing Sector of India? An Empirical Investigation

Author

Listed:
  • Anamitra Roychowdhury

Abstract

One of the most contentious policy issues in India is the demand for labour market flexibility. This paper empirically investigates two major reasons normally advanced in literature for explaining the phenomena of ‘jobless growth’ in the organized manufacturing sector and consequently introducing labour flexibility, namely (i) job security laws by strictly regulating hire and fire of workers makes labour adjustment process virtually impossible to undertake and (ii) rising real wages encourage adoption of capital intensive techniques in production – each impeding (not necessarily independently) employment growth. From our empirical analysis we find little evidence to support these claims. In fact, evidence suggests considerable flexibility in workforce adjustment already enjoyed by firms through growing use of contract workers. Employment stagnation is rather explained by the method employed by Annual Survey of Industries to estimate workers and the underlying nature of technological progress witnessed in the organized manufacturing sector during the study period.

Suggested Citation

  • Anamitra Roychowdhury, 2018. "Do Labour Laws and Rising Real Wages Explain Employment Stagnation in the Organized Manufacturing Sector of India? An Empirical Investigation," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 7(1), pages 51-77, April.
    • Handle: RePEc:sae:agspub:v:7:y:2018:i:1:p:51-77
    DOI: 10.1177/2277976018758093
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/2277976018758093
    Download Restriction: no
    File URL: https://libkey.io/10.1177/2277976018758093?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bhalotra, Sonia R, 1998. "The Puzzle of Jobless Growth in Indian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(1), pages 5-32, February.
    2. Robinson,Joan, 1979. "Aspects of Development and Underdevelopment," Cambridge Books, Cambridge University Press, number 9780521295895.
    3. Fallon, Peter R. & Lucas, Robert E. B., 1993. "Job security regulations and the dynamic demand for industrial labor in India and Zimbabwe," Journal of Development Economics, Elsevier, vol. 40(2), pages 241-275, April.
    4. Fallon, Peter R & Lucas, Robert E B, 1991. "The Impact of Changes in Job Security Regulations in India and Zimbabwe," The World Bank Economic Review, World Bank, vol. 5(3), pages 395-413, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bibhas Saha, 2006. "Labour Institutions in China and India," Journal of South Asian Development, , vol. 1(2), pages 179-205, October.
    2. Pradip Kumar Biswas & Saurabh Bandyopadhyay, 2021. "Labour Market Institutions, Industry Structure and Productivity in Indian Manufacturing Sector," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(4), pages 999-1021, December.
    3. Sonja Fagernäs, 2010. "Labor Law, Judicial Efficiency, and Informal Employment in India," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 7(2), pages 282-321, June.
    4. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    5. Saibal Ghosh, 2017. "Labour laws and innovation: Evidence from Indian states," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 60(2), pages 175-190, June.
    6. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 91-134.
    7. Kaushik Basu & Gary S. Fields & Shub Debgupta, 2009. "Labor Retrenchment Laws And Their Effect On Wages And Employment: A Theoretical Investigation," World Scientific Book Chapters, in: Bhaskar Dutta & Tridip Ray & E Somanathan (ed.), New And Enduring Themes In Development Economics, chapter 9, pages 181-205, World Scientific Publishing Co. Pte. Ltd..
    8. Admasu Shiferaw & Degol Hailu, 2016. "Job creation and trade in manufactures: industry-level analysis across countries," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-36, December.
    9. Aditya Bhattacharjea, 2006. "Labour Market Regulation and Industrial Performance in India--A Critical Review of the Empirical Evidence," Working papers 141, Centre for Development Economics, Delhi School of Economics.
    10. Shanthi Nataraj & Francisco Perez-Arce & Krishna B. Kumar & Sinduja V. Srinivasan, 2014. "The Impact Of Labor Market Regulation On Employment In Low-Income Countries: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 551-572, July.
    11. Anushree Karani & Rasananda Panda, 2018. "‘Make in India’ Campaign: Labour Law Reform Strategy and Its Impact on Job Creation Opportunities in India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 43(1-2), pages 58-69, February.
    12. Kakarlapudi, Kiran Kumar, 2010. "The Impact of Trade Liberalisation on Employment: Evidence from India’s Manufacturing Sector," MPRA Paper 35872, University Library of Munich, Germany, revised 10 Jan 2012.
    13. Vashisht, Pankaj, 2016. "Creating manufacturing jobs in India: Has openness to trade really helped?," Journal of Asian Economics, Elsevier, vol. 42(C), pages 53-64.
    14. Pankaj Vashisht, 2015. "Creating Manufacturing Jobs in India: Has Openness to Trade Really Helped?," Working Papers id:7126, eSocialSciences.
    15. Kijima, Yoko, 2006. "Why did wage inequality increase? Evidence from urban India 1983-99," Journal of Development Economics, Elsevier, vol. 81(1), pages 97-117, October.
    16. Fields,Gary S., 2005. "A guide to multisector labor market models," Social Protection and Labor Policy and Technical Notes 32547, The World Bank.
    17. Chetan Agrawal, 2013. "The Effects of Liberalization on the Indian Economy," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 38(4), pages 373-398, November.
    18. Bhaskar Dasgupta, 2023. "Towards a Comprehensive Index of Labour Law Reform and Ranking of States," Arthaniti: Journal of Economic Theory and Practice, , vol. 22(2), pages 181-205, December.
    19. 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.
    20. Basu, Kaushik & Fields, Gary S. & Debgupta, Shub, 2000. "Alternative Labor Retrenchment Laws and Their Effect on Wages and Employment: A Theoretical Investigation with Special Reference to Developing Countries," Working Papers 00-11, Cornell University, Center for Analytic Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:agspub:v:7:y:2018:i:1:p:51-77. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.