The Effects of Employment Protection Legislation on Indian Manufacturing

Economic & Political Weekly, Vol. XLIV, No. 22, pp. 55-62, May 30, 2009

24 Pages Posted: 26 Jul 2009 Last revised: 13 Dec 2010

See all articles by Aditya Bhattacharjea

Aditya Bhattacharjea

Delhi School of Economics, University of Delhi

Date Written: June 24, 2009

Abstract

This paper extends an earlier critique (Bhattacharjea 2006) of the empirical literature on labour regulation and industrial performance in India, but focuses more narrowly on the impact of legal restrictions on layoffs, retrenchment and plant closures. After summarizing the earlier paper, it describes in detail the variability of employment protection regimes across Indian states attributable to court judgments, a key factor which other authors have ignored. The earlier literature has also ignored the possibility that firms may adapt to restrictions on labour flexibility via fragmentation and outsourcing of production. Some conclusions of the earlier studies are also undermined by lacunae in the official industrial statistics. The paper concludes by summarizing the results of an empirical exercise based on an alternative methodology.

Keywords: Job security regulations, Labour market reform, Subcontracting

JEL Classification: J53, J68, K31

Suggested Citation

Bhattacharjea, Aditya, The Effects of Employment Protection Legislation on Indian Manufacturing (June 24, 2009). Economic & Political Weekly, Vol. XLIV, No. 22, pp. 55-62, May 30, 2009, Available at SSRN: https://ssrn.com/abstract=1424865

Aditya Bhattacharjea (Contact Author)

Delhi School of Economics, University of Delhi ( email )

University Enclave
Delhi, 110007
India
(91-11)2766-6533 (Phone)
(91-11)2766-7159 (Fax)

HOME PAGE: http://www.econdse.org/faculty/aditya/aditya.htm

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
250
Abstract Views
979
rank
149,224
PlumX Metrics