Labour Regulations and Industrial Performance: Evidence from India

This paper investigates the impact of recent state level reforms passed over the period 2003 to 2016 to a central law on industrial relations, the Industrial Disputes Act of 1947, on plant outcomes in the formal manufacturing sector in India. Exploiting variation in the timing of the state level reforms, I use a stacked event study design that compares treated plants to similar control plants in untreated states to estimate the average effect of state level reforms classified as pro-worker or pro-employer. I find that labour reforms that are pro-employer significantly raise plant output, wage bill and the average earnings of workers, while pro-worker reforms are negatively related to average worker earnings but have no other meaningful effects on plant performance. I also find heterogeneity in estimated treatment effects, with place based labour reforms targeting specific industrial locales having higher effects on average compared to other types of labour reforms.

The Impact of Size-Dependent Labour Laws on the Allocation of Resources in India

I investigate the effect of job security provisions in India that imposed regulatory requirements on plants above a certain size threshold. Using data on plants in the registered manufacturing sector in India over the period 1998 to 2018, I first test for discontinuities in the size distribution of plants at the regulatory threshold of 100 workers. I do not find evidence of significant discontinuities in the plant size distribution at 100 workers. I then use a sharp regression discontinuity design to examine if there are systematic differences in plant outcomes at the regulatory threshold. I provide suggestive evidence that regulatory costs lead to a decline of 6.7% in plant output.

A Quantitative Study of Poverty Traps

This paper undertakes a quantitative exploration of how initial conditions matter for long run economic outcomes when there are capital market imperfections, using a model of occupational choice with financial frictions. The model exhibits both poverty traps at the level of the individual, as well as at the aggregate level. At the level of the individual, I find multiple steady states for similar individuals starting out with different wealth levels, with differences in wealth and consumption that persist over time. Aggregate poverty traps arise in this model due to general equilibrium effects of wages adjusting to individual occupational choices. I numerically show certain initial conditions, in terms of the distribution of wealth and aggregate capital, that determine whether economies converge to a high wage equilibrium or stay trapped in poverty at a low wage equilibrium.