9 On labor laws Duta Roy 2004 in one of the few statstcal studies at the

9 on labor laws duta roy 2004 in one of the few

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9. On labor laws , Duta Roy (2004), in one of the few statstcal studies at the industry level in India, found that a. over the period 1960—1961 to 1994—1995 the impact of job security regulatons was statstcally insignifcant in 15 of the 16 industries studied. b. The rigidites in the adjustment of labor were about the same even before the introducton of stringent job security clauses in the law (the 1976 and 1982 amendments to the Industrial Disputes Act). c. More recent case studies of labor practces in 10 states and 9 industries over the period 1991—1998 by Deshpande (2004) also suggest that the Indian labor market is not as infexible as it ofen is made out to be : many frms were able to change employment as they wanted or increase the share of nonpermanent ( casual and temporary) workers . d. One problem in citng such data from existng frms, however , is the inevitable selecton problem: one does not know about frms that did not enter the industry because of the stringent labor laws . e. Labor laws are implemented at the state level and it is well known that many state governments look the other way when they are openly violated —Jenkins (2000) has referred to this as an example of " reform by stealth ." f. Court judgments on the interpretaton of the laws also vary by states . 14 Downloaded by Vicky Gupta ([email protected]) lOMoARcPSD|3929542
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10. One of the most detailed econometric studies of industrial growth based on state-level Annual Survey of Industries (ASI) data in India for 42 three-digit manufacturing industries for the period 1980—2004 is by Gupta, Hasan, and Kumar(2009). They fnd that the impact of delicensing reforms (since 1985) has been highly uneven across industries : Labor-intensive industries , use unskilled labor, and depend on infrastructure (or are energy- dependent) have experienced smaller gains in growth of value added from those reforms . a. States with less compettve product-market regulatons have experienced slower growth and states with more infexible labor-market regulatons have experienced slower growth , partcularly in labor-intensive industries. See fgures 2 and 3. Figure 2: GVA and Infrastructure Figure 3: GVA and Flexibility of Labour Market 15 Downloaded by Vicky Gupta ([email protected]) lOMoARcPSD|3929542
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11. The labor market may be more "fexible" in China than in India , but one should not exaggerate the diference in job security and benefts. a. As Cai, Park, and Zhao (2008) point out, untl the late 1990s the government tghtly restricted the dismissal of workers in China. Enterprises could dismiss no more than 1% of their employees each year, were barred from dismissing certain types of workers, and were expected to place dismissed workers in new jobs. b. Then at the end of 1990s came the large-scale layofs from SOEs. c. But Giles, Park, and Cai (2006) fnd that during the period 1996—2001 a signifcant fracton of unemployed workers (nearly 50% in the case of older workers) had access to public subsidies (including post-layof xiagang subsidies for three years, unemployment benefts at the end of those three years, and social assistance through the minimum living standard program).
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