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Unions, Wages and Labour Productivity : Evidence from Indian Cotton Mills

  • Gupta, Bishnupriya

    (Department of Economics, University of Warwick)

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    This paper uses firm level data from all the textile producing regions in India to examine the relation between wages, unionization and labour productivity. We find that fewer workers were employed per machine in the unionized mills in Bombay and Ahmedabad, as compared to non-unionized regions implying that low labour productivity was not due to union resistance to increased work intensity. Our findings suggest that while low wages in India encouraged overmanning, higher wages, prompted by unionization, had productivity enhancing effects. We explore alternative explanations for low labour productivity, arising from the managerial and institutional structure of Indian cotton mills.

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    File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2006/twerp_753.pdf
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    Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 753.

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    Length: 37 pages
    Date of creation: 2006
    Date of revision:
    Handle: RePEc:wrk:warwec:753
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    Web page: http://www2.warwick.ac.uk/fac/soc/economics/

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    1. Steven G. Allen, 1986. "Unionization and productivity in office building and school construction," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(2), pages 187-201, January.
    2. Machin, S.J., 1988. "The Productivity Effects Of Unionisation And Firm Size In British Engineering Firms," The Warwick Economics Research Paper Series (TWERPS) 293, University of Warwick, Department of Economics.
    3. Steven G. Allen, 1983. "Unionization and Productivity in Office Building and School Construction," NBER Working Papers 1139, National Bureau of Economic Research, Inc.
    4. Edward C. Prescott & Stephen L. Parente, 1999. "Monopoly Rights: A Barrier to Riches," American Economic Review, American Economic Association, vol. 89(5), pages 1216-1233, December.
    5. Brown, Charles & Medoff, James, 1978. "Trade Unions in the Production Process," Journal of Political Economy, University of Chicago Press, vol. 86(3), pages 355-78, June.
    6. Brian Bemmels, 1987. "How unions affect productivity in manufacturing plants," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 40(2), pages 241-253, January.
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