Is Pro-Labor Law Pro-Women? Evidence from India

Abstract

I study the effects of state-level differences in labor regulation on labor market outcomes of women in India. Using a representative sample of urban households from 2005, I find that labor regulation has a large negative effect on women’s economic activity, mainly employment. My estimates suggest that a one standard deviation increase in the labor regulation measure decreases the probability of a woman being economically active by 3% to 4% — the implied decrease in female labor force is between 15% and 18%. The effects on men’s participation are around zero. I do not find labor regulation to have a significant effect on male wages or the gender wage gap. Finally, labor regulation is associated with women having less say at home and lower sex ratio.

Keywords: gender gap, regulation of labor, employment

JEL Classification: J16, J23, K31