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Political Federalism and Innovation: Are de jure Labor Regulations Absolute?

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  • Ghosh Saibal

    (Centre for Advanced Financial Research and Learning, Reserve Bank of India, Central Office, Fort, Mumbai 400001, India)

Abstract

The importance of labour regulation in influencing innovative activity has attracted significant attention in the literature. What has not been adequately explored is the role played by different categories of such laws. In this context, employing state-level data for India during 1992–2010, we investigate how political federalism interacts with labour laws to influence innovative activity. Our findings suggest that although certain labour laws foster innovation, its complementarities with political federalism end up dampening innovation. These results call into question the widely held view of the innovation-enhancing effects of labour laws and suggest that the hitherto unaddressed political channel might have an important role to play in this regard.

Suggested Citation

  • Ghosh Saibal, 2017. "Political Federalism and Innovation: Are de jure Labor Regulations Absolute?," Asian Journal of Law and Economics, De Gruyter, vol. 8(3), pages 1-15, December.
    • Handle: RePEc:bpj:ajlecn:v:8:y:2017:i:3:p:15:n:1
    DOI: 10.1515/ajle-2016-0014
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    Cited by:

    1. Saibal Ghosh, 2018. "Corporate investment and political federalism: does judicial efficiency matter?," Indian Economic Review, Springer, vol. 53(1), pages 263-285, December.
    2. Choutagunta Abishek S., 2019. "Effects of Labour Regulation on Manufacturing Firms in India: A Leximetric Approach," Asian Journal of Law and Economics, De Gruyter, vol. 10(1), pages 1-15, April.

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    More about this item

    Keywords

    innovation; dispute resolution; employment protection; India;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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