Labor Regulations, Employment and Wages: Evidence from India's Apparel Sector

21 Pages Posted: 12 Jan 2017

See all articles by Rana Hasan

Rana Hasan

Asian Development Bank; University of Maryland - Department of Economics

Aashish Mehta

University of California, Santa Barbara (UCSB)

Asha Sundaram

University of Cape Town (UCT)

Date Written: January 2017

Abstract

While India is among the world's largest producers and exporters of apparel products, the sector has not performed to its potential. This study analyzes why this might be so from the perspective of the structure of production in the sector, the most striking aspect of which is a firm size distribution heavily dominated by small firms. Using nationally representative firmā€level and labor force survey data, we argue that the dominance of firms operating at scales too small to apply modern production and management technologies is one proximate reason for India's relative underperformance. Further, we note that India's labor regulations and the associated enforcement regime are important policy drivers of Indian firms' tendency to avoid placing "too many workers under one roof".

Keywords: Apparel industry, firm size distribution, formal and informal sectors, inclusive growth, India, labor regulation

JEL Classification: J3, J46, J48, L11, L67, O14, O17

Suggested Citation

Hasan, Rana and Mehta, Aashish Sunil and Sundaram, Asha, Labor Regulations, Employment and Wages: Evidence from India's Apparel Sector (January 2017). Asian Economic Policy Review, Vol. 12, Issue 1, pp. 70-90, 2017. Available at SSRN: https://ssrn.com/abstract=2897844 or http://dx.doi.org/10.1111/aepr.12160

Rana Hasan (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
808-944-7590 (Phone)
808-944-7399 (Fax)

Aashish Sunil Mehta

University of California, Santa Barbara (UCSB) ( email )

Santa Barbara, CA 93106
United States

HOME PAGE: http://www.global.ucsb.edu/people/aashish-mehta

Asha Sundaram

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

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