Labour Reforms and Employment in Manufacturing Plants in India : An Analysis Using a Difference-in-Difference Research Design

Since 2014, several Indian states have taken steps towards easing labour regulations, the prominent ones among them being the raising of the threshold of applicability of Chapter V-B of the Industrial Disputes Act (IDA) from 100 to 300 workers, lifting thereby the requirement of government approval for retrenchment of regular workers in medium-size industrial firms, and amending the Contract Labour (Regulation and Abolition) Act, 1970. Such reforms were made in Rajasthan in 2014 and Andhra Pradesh, Haryana, Jharkhand, Maharashtra and Uttar Pradesh during 2015 to 2017 bringing about substantial labour reforms. The paper investigates the impact of the labour reforms in these states on industrial employment. The key finding emerging from the analysis is that the labour reforms in India during 2014-2017 significantly positively impacted industrial employment. These reforms raised the employment of regular workers as well as the employment of contract workers