Journal
QUARTERLY JOURNAL OF ECONOMICS
Volume 119, Issue 1, Pages 91-134Publisher
OXFORD UNIV PRESS INC
DOI: 10.1162/003355304772839533
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This paper investigates whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth in the period 1958-1992. We show that states which amended the Industrial Disputes Act in a pro-worker direction experienced lowered output, employment, investment, and productivity in registered or formal manufacturing. In contrast, output in unregistered or informal manufacturing increased. Regulating in a pro-worker direction was also associated with increases in urban poverty. This suggests that attempts to redress the balance of power between capital and labor can end up hurting the poor.
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