Trade, Labour Institutions and Flexibility in Indian Manufacturing

38 Pages Posted: 7 Oct 2010 Last revised: 5 Apr 2012

See all articles by Kunal Sen

Kunal Sen

University of Manchester

Bibhas Saha

University of East Anglia (UEA) - School of Economic and Social Studies

Dibyendu Maiti

Indian Institute of Engineering Science and Technology, Shibpur

Date Written: July 6, 2010

Abstract

There has been increasing ‘flexibilisation,’ in the formal labour markets of both developed and developing countries. Labour institutions and globalisation are often taken to be causally related to this phenomenon, but the evidence remains inconclusive. In India, there has been an increasing use of temporary workers employed through contractors (contract workers), who are not represented by trade unions and who do not fall under the purview of the labour laws that are applicable to directly employed workers (formal workers) in formal labour markets. We develop a model of labour demand where firms choose a mix of contract workers and formal workers, rather than formal workers alone. Then we test the model using state-industry-year panel data for Indian manufacturing from 1998 to 2005. We find that both pro-worker labour institutions and increased import penetration lead to greater use of contract labour in Indian manufacturing.

Keywords: Flexibilisation, Informalisation, Contract Workers, Trade, Labour Institutions, India

Suggested Citation

Sen, Kunal and Saha, Bibhas C. and Maiti, Dibyendu, Trade, Labour Institutions and Flexibility in Indian Manufacturing (July 6, 2010). Available at SSRN: https://ssrn.com/abstract=1688435 or http://dx.doi.org/10.2139/ssrn.1688435

Kunal Sen (Contact Author)

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Bibhas C. Saha

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom
+44 0 1603 593404 (Phone)
+44 0 1603 456259 (Fax)

HOME PAGE: http://www.uea.ac.uk/eco/people/saha_b.htm

Dibyendu Maiti

Indian Institute of Engineering Science and Technology, Shibpur ( email )

P.O. - Botanic Garden, Howrah
West Bengal, 711103
India

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