Sunday, October 14, 2007
Labor rigidity in India
"THE Organisation for Economic Co-operation and Development has long lectured its rich member countries about pursuing free trade, privatisation and flexible labour and product markets. It has now produced its first economic survey of India, which once had some of the world's most interventionist economic policies. India wins much praise for its reforms over the past two decades, but the OECD reckons that the country still has a long way to go: on many measures India scores badly relative to both member countries and the other emerging giants."
The Employment-Protection Legislation Index seems very useful. Unfortunately, the OECD only seems to calculate it for member nations and for a few special studies. Other authors use the Index for their studies, but there seems to be no comprehensive, reliable source to compare all nations There is a bried from the OECD on "Employment Protection: The Costs and Benefits of Greater Job Security" that employs the index.
Labor legislation and more generally labor policy seems really important. On the one hand, it offers protection for workers from exploitation by the economically powerful. On the other hand, excessive or poorly conceived labor legislation can deprive the economy of the flexibility it needs to respond quickly to new market challenges and new technological opportunities. I understand that one of the keys to the various economic tigers has been peaceful labor relations, which apparently can be promoted by good policies as well as good laws.
There are, I suppose other important forms of policy and legislation that might be considered in the area of labor, which influence the development of knowledge led development. For example, professional licensing, immigration (especially the immigration of "rainmakers" and technologically specialized workers), and educational laws and policies all all influence the knowledge base of the labor force.
Labels:
Development,
Economics
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