Labor Regulations and Plant Location Choice: Evidence From India
Certain regulations in developing countries have often been cited as impediments to progress. This paper considers one facet of these regulations - labor laws - and investigates whether these have detrimental effects on firm location and investment decisions. Conventional wisdom holds that pro-worker labor regulations within a state would hinder firm location in that state. We fine strong evidence that this is indeed the case, and our results are robust to alternative specifications. Furthermore, disaggregation by industrial classifications shows that although labor regulations continue to exert negative effects, location choices are also conditioned on other factors such as proximity to raw materials and minerals.
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- Timothy Besley & Robin Burgess, 2002.
"Can labour regulation hinder economic performance? Evidence from India,"
LSE Research Online Documents on Economics
3779, London School of Economics and Political Science, LSE Library.
- Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 91-134.
- Besley, Timothy J. & Burgess, Robin, 2002. "Can Labour Regulation Hinder Economic Performance? Evidence from India," CEPR Discussion Papers 3260, C.E.P.R. Discussion Papers.
- Timothy Besley & Robin Burgess, 2002. "Can Labour Regulation Hinder Economic Performance? Evidence from India," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 33, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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