Can Labor Regulation Hinder Economic Performance? Evidence from India This paper investigates whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth from 1958 to 1992. It shows that states that amended the Industrial Disputes Act in a pro-worker direction experienced lower output, employment, investment, and productivity in formal manufacturing. In contrast, output in informal manufacturing increased. Pro-worker labor regulation was also associated with increases in urban poverty, suggesting that attempts to balance power between capital and labor can hurt the poor. The study uses data on state amendments to the Industrial Disputes Act to analyze the impact of labor market regulation on manufacturing performance. It finds that pro-worker labor regulation resulted in lower output, employment, investment, and productivity in formal manufacturing, while informal manufacturing output increased. Pro-worker labor regulation is also associated with higher urban poverty. The paper highlights the role of labor market regulation in shaping economic performance and welfare. It finds that pro-worker labor regulation is negatively correlated with registered manufacturing output and employment, and positively correlated with informal manufacturing output. It also finds that pro-worker labor regulation is associated with higher urban poverty. The study also examines the effects of labor regulation on poverty. It finds that pro-worker labor regulation is associated with higher urban poverty, suggesting that attempts to balance power between capital and labor can hurt the poor. The paper concludes that labor market regulation in India has had significant effects on economic performance and welfare, and that pro-worker labor regulations have not promoted the interests of labor but have been a constraint on growth and poverty alleviation.Can Labor Regulation Hinder Economic Performance? Evidence from India This paper investigates whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth from 1958 to 1992. It shows that states that amended the Industrial Disputes Act in a pro-worker direction experienced lower output, employment, investment, and productivity in formal manufacturing. In contrast, output in informal manufacturing increased. Pro-worker labor regulation was also associated with increases in urban poverty, suggesting that attempts to balance power between capital and labor can hurt the poor. The study uses data on state amendments to the Industrial Disputes Act to analyze the impact of labor market regulation on manufacturing performance. It finds that pro-worker labor regulation resulted in lower output, employment, investment, and productivity in formal manufacturing, while informal manufacturing output increased. Pro-worker labor regulation is also associated with higher urban poverty. The paper highlights the role of labor market regulation in shaping economic performance and welfare. It finds that pro-worker labor regulation is negatively correlated with registered manufacturing output and employment, and positively correlated with informal manufacturing output. It also finds that pro-worker labor regulation is associated with higher urban poverty. The study also examines the effects of labor regulation on poverty. It finds that pro-worker labor regulation is associated with higher urban poverty, suggesting that attempts to balance power between capital and labor can hurt the poor. The paper concludes that labor market regulation in India has had significant effects on economic performance and welfare, and that pro-worker labor regulations have not promoted the interests of labor but have been a constraint on growth and poverty alleviation.