Working Paper: CEPR ID: DP3260
Authors: Timothy Besley; Robin Burgess
Abstract: This Paper investigates whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth in the period 1958-92. We show that pro-worker amendments 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 labour can end up hurting the poor.
Keywords: industrial relations; labour regulation
JEL Codes: H00; H10; I30; J50; K20; L50; L60; O20; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pro-worker amendments to the Industrial Disputes Act (J52) | lower levels of investment (G31) |
| pro-worker amendments to the Industrial Disputes Act (J52) | lower levels of employment (J63) |
| pro-worker amendments to the Industrial Disputes Act (J52) | lower levels of productivity (O49) |
| pro-worker amendments to the Industrial Disputes Act (J52) | lower levels of output in registered manufacturing (L60) |
| pro-worker regulations (J88) | slower growth in manufacturing output (O14) |
| pro-worker regulations (J88) | higher urban poverty (R11) |
| lower levels of output in registered manufacturing (L60) | higher urban poverty (R11) |
| West Bengal's pro-worker regulations (J88) | decline in manufacturing output per capita (O14) |
| Andhra Pradesh's pro-employer reforms (E69) | significant growth in manufacturing output (O14) |
| pro-worker regulations (J88) | 10% less poverty in West Bengal without such regulations (L51) |