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The costs of employment protection

Krishna, Kala and Dougherty, Sean and Frisancho, Veronica (2014) The costs of employment protection. International Growth Centre Blog (05 Feb 2014). Blog.

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Abstract

India has some of the more restrictive labour laws in the world. However, these laws cover only the organised sector. Thus, firms thinking of growing in size and becoming formal must weigh the advantages of size against the disadvantages of regulation. This keeps Indian firms small and informal unless they have a lot to lose by staying small, that is, when they are very good indeed. This, it is argued, results in a disproportionately large share of smaller, less productive firms, many of which operate in the informal sector, which employs nearly 90% of the Indian workforce. This makes sense given the uneven protection of employment across formal and informal sectors, with the latter being virtually unregulated. Strict labour laws may also result in very few large firms concentrating most of the total market production, as these regulations act as a barrier to becoming large.

Item Type: Website (Blog)
Official URL: http://www.theigc.org/
Additional Information: © 2014 The Author(s)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD8682 Industrial Relations - India
H Social Sciences > HF Commerce
J Political Science > JQ Political institutions Asia
Sets: Research centres and groups > International Growth Centre (IGC)
Date Deposited: 22 Jun 2017 10:19
Last Modified: 22 Jun 2017 10:19
URI: http://eprints.lse.ac.uk/id/eprint/82016

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