Can Labor Regulation Hinder Economic Performance?

Wojciech Sokolowski sokol at jhu.edu
Wed Jan 22 12:46:41 PST 2003


http://econ.lse.ac.uk/staff/rburgess/aea/indreg.pdf

Can Labor Regulation Hinder Economic Performance? Evidence from India. Timothy Besley and Robin Burgess London School of Economics Houghton Street London WC2A 2AE UK February 18, 2002 Abstract This paper investigates whether the industrial relations climate in Indian states has a.ected the pattern of manufacturing growth in the period 1958-92. We show that pro-worker ammendments 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 labor can end up hurting the poor.



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