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Effects of trade liberalisation, environmental and labour regulations on employment in India's organised textile sector

  • Badri Narayanan G

    ()

    (Indira Gandhi Institute of Development Research)

In recent years, employment has fallen in the organised textile sector despite an aggregate rise in output and capital. This paper analyses the role of various factors that influence employment using 3-digit classification of Indian textile industry from 1973-74 to 1997-98. Our results document that the fall in employment can be explained in terms of rise in wages, output shocks, lack of capital utilisation and trade restrictiveness pertaining to Multi Fibre Arrangement (MFA). Environmental regulations enhance employment in the sub-sectors that are most likely to be influenced by them. The results are robust to di erent measures of capital, its utilisation and disaggregation to statelevel. We also illustrate that in a post-MFA regime, employment in the sector is bound to increase owing to absence of trade restrictions and prospects of huge investment in general and in complying with environmental regulations, though the labour regulations might affect the magnitude of that increase.

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Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2005-005.

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Length: 41 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:ind:igiwpp:2005-005
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