Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India
A key prediction of dynamic labor demand models is that firing restrictions attenuate firms' employment responses to economic fluctuations. We provide the first direct test of this prediction using data from India. We exploit the fact that rainfall fluctuations, through their effects on agricultural productivity, generate variation in local demand within districts over time. Consistent with the theory, we find that industrial employment is more sensitive to shocks where labor regulation is less restrictive. Our results are robust to controlling for endogenous firm placement and vary across factory size in a pattern consistent with institutional features of Indian labor law.
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Journal Article biblioteca |
| Language: | en_US |
| Published: |
MIT Press
2013-07
|
| Subjects: | labor regulation, labor policy, |
| Online Access: | http://hdl.handle.net/10986/16605 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| id |
dig-okr-1098616605 |
|---|---|
| record_format |
koha |
| spelling |
dig-okr-10986166052021-04-23T14:03:31Z Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India Adhvaryu, Achyuta Chari, A. V. Sharma, Siddharth labor regulation labor policy A key prediction of dynamic labor demand models is that firing restrictions attenuate firms' employment responses to economic fluctuations. We provide the first direct test of this prediction using data from India. We exploit the fact that rainfall fluctuations, through their effects on agricultural productivity, generate variation in local demand within districts over time. Consistent with the theory, we find that industrial employment is more sensitive to shocks where labor regulation is less restrictive. Our results are robust to controlling for endogenous firm placement and vary across factory size in a pattern consistent with institutional features of Indian labor law. 2014-01-23T20:02:19Z 2014-01-23T20:02:19Z 2013-07 Journal Article Review of Economics and Statistics 1530-9142 http://hdl.handle.net/10986/16605 en_US http://creativecommons.org/licenses/by-nc-nd/3.0/igo CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank MIT Press Publications & Research :: Journal Article India |
| institution |
Banco Mundial |
| collection |
DSpace |
| country |
Estados Unidos |
| countrycode |
US |
| component |
Bibliográfico |
| access |
En linea |
| databasecode |
dig-okr |
| tag |
biblioteca |
| region |
America del Norte |
| libraryname |
Biblioteca del Banco Mundial |
| language |
en_US |
| topic |
labor regulation labor policy labor regulation labor policy |
| spellingShingle |
labor regulation labor policy labor regulation labor policy Adhvaryu, Achyuta Chari, A. V. Sharma, Siddharth Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India |
| description |
A key prediction of dynamic labor demand models is that firing restrictions attenuate firms' employment responses to economic fluctuations. We provide the first direct test of this prediction using data from India. We exploit the fact that rainfall fluctuations, through their effects on agricultural productivity, generate variation in local demand within districts over time. Consistent with the theory, we find that industrial employment is more sensitive to shocks where labor regulation is less restrictive. Our results are robust to controlling for endogenous firm placement and vary across factory size in a pattern consistent with institutional features of Indian labor law. |
| format |
Journal Article |
| topic_facet |
labor regulation labor policy |
| author |
Adhvaryu, Achyuta Chari, A. V. Sharma, Siddharth |
| author_facet |
Adhvaryu, Achyuta Chari, A. V. Sharma, Siddharth |
| author_sort |
Adhvaryu, Achyuta |
| title |
Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India |
| title_short |
Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India |
| title_full |
Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India |
| title_fullStr |
Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India |
| title_full_unstemmed |
Firing Costs and Flexibility : Evidence from Firms' Employment Responses to Shocks in India |
| title_sort |
firing costs and flexibility : evidence from firms' employment responses to shocks in india |
| publisher |
MIT Press |
| publishDate |
2013-07 |
| url |
http://hdl.handle.net/10986/16605 |
| work_keys_str_mv |
AT adhvaryuachyuta firingcostsandflexibilityevidencefromfirmsemploymentresponsestoshocksinindia AT chariav firingcostsandflexibilityevidencefromfirmsemploymentresponsestoshocksinindia AT sharmasiddharth firingcostsandflexibilityevidencefromfirmsemploymentresponsestoshocksinindia |
| _version_ |
1756573226622779392 |