Legislation, enforcement and adjudication in Indian labor markets

This chapter deals with labor regulations, law enforcement and the adjudication process, respectively. It examines the economic impact of this legal and institutional system. The chapter then reviews the system of regulations, law-enforcement and dispute resolution that supports Indian labor markets and found it to do very little to improve workers' welfare. After independence, labor laws continued to be influenced more by the desire to protect labor, which had originated in nationalism, than by considerations of efficiency in labor markets and dispute settlement. India's 2002 Investment climate survey (ICS) provides a more detailed picture of labor inspections obtained from the responses of a large sample of firms. The data suggests a strong effect of minimum wages in supporting wages for unskilled casual workers in urban and rural areas. Preliminary analysis suggests that minimum wages may be supporting the wages of less skilled workers without apparent costs on employment.