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Can labour regulation hinder economic performance? Evidence from India

  • Timothy Besley
  • Robin Burgess

This paper investigates whether the industrial relations climate in Indian States has affected the pattern of manufacturing growth in the period 1958-92. We show that pro-worker amendments to the Industrial Disputes Act are associated with lowered investment, employment, productivity and output in registered manufacturing. Regulating in a pro-worker direction is also associated with increases in urban poverty. This suggests that attempts to redress the balance of power between capital and labour can end up hurting the poor.

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File URL: http://eprints.lse.ac.uk/3779/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3779.

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Length: 50 pages
Date of creation: Feb 2002
Date of revision:
Handle: RePEc:ehl:lserod:3779
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