Labor Regulations and Job Quality: Evidence from India

Abstract

The authors examine whether measures of job quality in India's manufacturing sector differ systematically across states with varying types of labor regulation. Their analysis uses repeated cross sections of India's National Sample Survey Organization (NSSO) household survey data from 1983 to 2004 merged with data on state-level regulations covering employment adjustment and dispute resolution. Results from a differences-in-differences procedure show that restrictions on employment adjustment and dispute settlement in a pro-worker direction contribute to improved job quality for women along most measures. Such regulations yield mixed results for men, however; results indicate that higher wages come at the expense of fewer hours, substitution toward in-kind compensation, and less job security. The authors conclude that India's labor legislation does have a silver lining with respect to job quality, but that silver lining applies selectively.