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Labor Regulations, Employment and Wages: Evidence from India's Apparel Sector
Author(s) -
Hasan Rana,
Kapoor Nidhi,
Mehta Aashish,
Sundaram Asha
Publication year - 2017
Publication title -
asian economic policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.58
H-Index - 20
eISSN - 1748-3131
pISSN - 1832-8105
DOI - 10.1111/aepr.12160
Subject(s) - dominance (genetics) , clothing , production (economics) , enforcement , economics , labour economics , distribution (mathematics) , business , macroeconomics , geography , mathematical analysis , biochemistry , chemistry , mathematics , archaeology , political science , law , gene
While India is among the world's largest producers and exporters of apparel products, the sector has not performed to its potential. This study analyzes why this might be so from the perspective of the structure of production in the sector, the most striking aspect of which is a firm size distribution heavily dominated by small firms. Using nationally representative firm‐level and labor force survey data, we argue that the dominance of firms operating at scales too small to apply modern production and management technologies is one proximate reason for India's relative underperformance. Further, we note that India's labor regulations and the associated enforcement regime are important policy drivers of Indian firms' tendency to avoid placing “too many workers under one roof”.