IDEAS home Printed from https://ideas.repec.org/p/ecq/wpaper/1118.html
   My bibliography  Save this paper

Labor Regulations and the Firm Size Distribution in Indian Manufacturing

Author

Listed:
  • Rana Hasan
  • Karl Robert L. Jandoc

Abstract

We use data from Indian manufacturing to describe the distribution of firm size in terms of employment and discuss implications for public policy, especially labor regulations. A unique feature of our analysis is the use of nationally representative establishment-level data from both the registered (formal) and unregistered (informal) segments of the Indian manufacturing sector. While we find there to be little difference in the size distribution of firms across states believed to have flexible labor regulations versus those with inflexible labor regulations, restricting attention to labor-intensive industries changes the picture dramatically. Here, we find greater prevalence of larger sized firms in states with flexible labor regulations. Moreover, this differential prevalence is higher among firms that commenced production after 1982, when a key aspect of Indian labor regulations was tightened. Overall, our findings are consistent with the argument that labor regulations have affected firm size adversely.

Suggested Citation

  • Rana Hasan & Karl Robert L. Jandoc, 2012. "Labor Regulations and the Firm Size Distribution in Indian Manufacturing," Working Papers 1118, School of International and Public Affairs, Columbia University, revised Jan 2012.
    • Handle: RePEc:ecq:wpaper:1118
    as

    Download full text from publisher

    File URL: http://indianeconomy.columbia.edu/sites/default/files/working_papers/wp_2012-3.pdf
    File Function: First version, 2012
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Panagariya, Arvind, 2011. "India: The Emerging Giant," OUP Catalogue, Oxford University Press, number 9780199751563, Decembrie.
    2. Gupta,Poonam & Hasan, Rana & Kumar, Utsav, 2009. "Big Reforms but Small Payoffs: Explaining the Weak Record of Growth in Indian Manufacturing," India Policy Forum, National Council of Applied Economic Research, vol. 5(1), pages 59-123.
    3. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Who are the microenterprise owners ? Evidence from Sri Lanka on Tokman v. de Soto," Policy Research Working Paper Series 4635, The World Bank.
    4. Christopher M. Edmonds (ed.), 2003. "Reducing Poverty in Asia," Books, Edward Elgar Publishing, number 3000, March.
    5. Moore, Henry Ludwell, 1911. "Laws of Wages: An essay in statistical economics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number moore1911.
    6. Nataraj, Shanthi, 2011. "The impact of trade liberalization on productivity: Evidence from India's formal and informal manufacturing sectors," Journal of International Economics, Elsevier, vol. 85(2), pages 292-301.
    7. Jesus Felipe & Rana Hasan (ed.), 2006. "Labor Markets in Asia," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-62738-3, May.
    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. 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. T. Ravi Kumar, 2002. "The Impact of Regional Infrastructure Investment in India," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 194-200.
    11. T. C. A. Anant & R. Hasan & P. Mohapatra & R. Nagaraj & S. K. Sasikumar, 2006. "Labor Markets in India: Issues and Perspectives," Palgrave Macmillan Books, in: Jesus Felipe & Rana Hasan (ed.), Labor Markets in Asia, chapter 0, pages 205-300, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2013. "Size and age of establishments: evidence from developing countries," Policy Research Working Paper Series 6718, The World Bank.
    2. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2017. "What Determines Entrepreneurial Outcomes in Emerging Markets? The Role of Initial Conditions," The Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2478-2522.
    3. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2014. "Does local financial development matter for firm lifecycle in India ?," Policy Research Working Paper Series 7008, The World Bank.
    4. Diti Goswami & Sourabh Bikas Paul, 2020. "Labor Reforms in Rajasthan: A boon or a bane?," Papers 2012.01016, arXiv.org.
    5. K.V. Ramaswamy, 2013. "Size-dependent labour regulations and threshold effects: The Case of contract-worker intensity in Indian manufacturing," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-012, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. Srivastava, Ravi., 2016. "Structural change and non-standard forms of employment in India," ILO Working Papers 994897513402676, International Labour Organization.
    7. Borooah, Vani, 2019. "The Labour Market in India," MPRA Paper 101673, University Library of Munich, Germany.
    8. Ravi S. Srivastava, 2016. "Myth and reality of labour flexibility in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 59(1), pages 1-38, March.
    9. Isabelle Joumard & Urban Sila & Hermes Morgavi, 2015. "Challenges and Opportunities of India's Manufacturing Sector," OECD Economics Department Working Papers 1183, OECD Publishing.
    10. Hasan, Rana & Mehta, Aashish & Sundaram, Asha, 2021. "The effects of labor regulation on firms and exports: Evidence from Indian apparel manufacturing," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 183-200.
    11. Betcherman, Gordon, 2014. "Labor market regulations : what do we know about their impacts in developing countries ?," Policy Research Working Paper Series 6819, The World Bank.
    12. Das, Satadru & Ghosh, Saurabh & Mazumder, Debojyoti & Tushavera, Jitendra, 2023. "Impact of COVID-19 shock on a segmented labour market: Analysis using a unique panel dataset," MPRA Paper 116780, University Library of Munich, Germany.
    13. Radhicka Kapoor, 2014. "Creating Jobs in India’s Organised Manufacturing Sector," Working Papers id:6208, eSocialSciences.

    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. Nihar Shembavnekar, 2015. "Tariff Liberalisation, Labour Market Flexibility and Employment: Evidence from India," Working Paper Series 8115, Department of Economics, University of Sussex Business School.
    2. 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.
    3. Nihar Shembavnekar, 2019. "Economic Reforms, Labour Markets and Formal Sector Employment: Evidence from India," Economies, MDPI, vol. 7(2), pages 1-42, April.
    4. J.Salcedo Cain & Rana Hasan & Devashish Mitra, 2010. "Trade Liberalization and Poverty Reduction: New Evidence from Indian States," Working Papers 3333, School of International and Public Affairs, Columbia University, revised Nov 2010.
    5. Hasan, Rana & Mitra, Devashish & Ranjan, Priya & Ahsan, Reshad N., 2012. "Trade liberalization and unemployment: Theory and evidence from India," Journal of Development Economics, Elsevier, vol. 97(2), pages 269-280.
    6. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1152-1199, December.
    7. Nihar Shembavnekar, 2018. "Did India’s economic reforms generate jobs? Essays on economic liberalisation, labour market flexibility and employment in the Indian manufacturing sector (1990-2006)," Economics PhD Theses 0917, Department of Economics, University of Sussex Business School.
    8. Matthew Embrey & Guillaume R. Frechette & Sevgi Yuksel, 2016. "Cooperation in the Finitely Repeated Prisoner's Dilemma," Working Paper Series 8616, Department of Economics, University of Sussex.
    9. Nihar Shembavnekar, 2019. "Economic Reform, Labour Markets and Informal Sector Employment: Evidence from India," Economies, MDPI, vol. 7(2), pages 1-42, June.
    10. Asha Sundaram & Reshad Ahsan & Devashish Mitra, 2012. "Complementarity between Formal and Informal Manufacturing in India: The Role of Policies and Institutions," Working Papers 1116, School of International and Public Affairs, Columbia University, revised Apr 2012.
    11. Gupta, Poonam & Kumar, Utsav, 2010. "Performance of Indian Manufacturing in the Post Reform Period," MPRA Paper 24898, University Library of Munich, Germany.
    12. Bhaskar Jyoti Neog & Bimal Kishore Sahoo, 2020. "Job Reallocation Dynamics in India: Evidence from Large Manufacturing Plants," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(4), pages 934-959, August.
    13. Hasan, Rana & Mitra, Devashish & Sundaram, Asha, 2013. "The Determinants of Capital Intensity in Manufacturing: The Role of Factor Market Imperfections," World Development, Elsevier, vol. 51(C), pages 91-103.
    14. Purna Banerjee & C. Veeramani, 2019. "Export competitiveness, labour laws, and gender differences in job dynamics: Analysis of manufacturing industries across Indian States," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-035, Indira Gandhi Institute of Development Research, Mumbai, India.
    15. Choutagunta Abishek S., 2019. "Effects of Labour Regulation on Manufacturing Firms in India: A Leximetric Approach," Asian Journal of Law and Economics, De Gruyter, vol. 10(1), pages 1-15, April.
    16. Sen Gupta, Abhijit & Hasan, Rana & Lamba, Sneha, 2014. "Growth, Structural Change, and Poverty Reduction: Evidence from India," MPRA Paper 55247, University Library of Munich, Germany.
    17. 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.
    18. Sean Dougherty & Verónica Frisancho Robles & Kala Krishna, 2011. "Employment Protection Legislation and Plant-Level Productivity in India," OECD Economics Department Working Papers 917, OECD Publishing.
    19. Arjun Jayadev & Amay Narayan, 2020. "The Evolution of India's Industrial Labour Share and its Correlates," Development and Change, International Institute of Social Studies, vol. 51(4), pages 998-1017, July.
    20. Radhicka Kapoor & P. P. Krishnapriya, 2019. "Explaining the contractualisation of India’s workforce," Working Papers id:12998, eSocialSciences.

    More about this item

    Keywords

    India; Labor regulations; Firm size distribution; manufacturing; employment; public policy;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ecq:wpaper:1118. 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: Ursula Schwarzhaupt (email available below). General contact details of provider: https://edirc.repec.org/data/siclbus.html .

    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.